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Should You Buy Apple ETFs Ahead of the Holiday Season?

Sanghamitra Saha

Apple AAPL stock jumped to an all-time high on Oct 21, following Raymond James’ new price target of $280, which was raised from $250. The iPhone maker’s shares went up more than 1.7% on Oct 21 to trade at $240.5. So far this year, shares of Apple have jumped more than 50%.

Is the Signal Bullish Heading Into Holiday Season?

For six times since 2000, when Apple shares saw an around 40% jump in the first nine months of the year, the stock also saw solid gains headed into the fourth quarter , according to hedge fund analytics tool Kensho, and “the rally in Apple’s shares often continued through the end of the year,” per an article published on CNBC. In such scenarios, Apple shares gained an average of 18%, with the stock trading positively 83% of the time.

New Gadget Launches Prior to the Holiday Season

At its September hardware event, Apple launched a set of new iPhones — iPhone 11, the iPhone 11 Pro, and the iPhone 11 Pro Max — for a lower prices. The products were available from Sep 20. Also, Apple launched its fifth-generation Apple Watch smartwatch. Apple Watch Series 5 features an always-on display and has new emergency features, such as international emergency calling (read: Apple Unveils New Gadgets: ETFs in Focus).

After years of high pricing, the gadget maker is now shifting its strategy toward a low-pricing model in order to fight declining iPhone sales and stay competitive in the market. Apple CEO Tim Cook said initial sales were off to a “very strong start.”

J.P. Morgan too raised its price target on Apple to $265, as a reflection of stronger-than-expected demand for the new phones. The firm now sees Apple as selling 3 million more iPhones than expected in the final quarter of 2019. Also, the expected launch of a lower-cost smartphone, the whispered iPhone SE 2, in early 2020 should create "more stable near-term conditions" for the Apple stock.

However, the Apple stock currently has a Zacks Rank #4 (Sell) as the stock lacks value. However, the upcoming holiday season could be gratifying for investors thanks to seasonality. The slew of new gadgets and more expected buying on Black Friday may boost Apple’s earnings in the fourth quarter. To tap this, investors can play Apple-heavy ETFs as the basket approach lessens company-specific risks.

ETFs in Focus

Below we highlight five funds having Apple as the top or second firm with a double-digit allocation and a Zacks Rank #1 (Strong Buy) with a Medium risk outlook:

Select Sector SPDR Technology ETF XLK

This most-popular technology ETF has $22.5 billion in AUM and charges 13 basis points (bps) in fees per year from investors. AAPL occupies the second position and makes up for roughly 18.4% of assets (read: ETFs to Buy on Phase 1 of U.S.-China Trade Deal).

Vanguard Information Technology ETF VGT

This fund also targets the broad tech sector with Apple as the top firm holding 16.3%. It has amassed $21.4 billion in its asset base while charges 10 bps in annual fees.

MSCI Information Technology Index ETF FTEC

With AUM of $2.6 billion, the product allocates 15.5% in the second holding Apple. The ETF has 0.08% in expense ratio.

iShares Dow Jones US Technology ETF IYW

This ETF provides investors exposure to the broad technology stocks, charging investors 42 bps in annual fees. Here, Apple is the second firm and accounts for 17.1% allocation. The fund has AUM of $4.2 billion.

Invesco QQQ QQQ

This ETF provides exposure to the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization, with Apple as the first firm, which accounts for 11.39% share in the basket. It has $76.5 billion in AUM and charges 20 bps in fees per year.

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Apple Inc. (AAPL) : Free Stock Analysis Report
 
iShares U.S. Technology ETF (IYW): ETF Research Reports
 
Technology Select Sector SPDR Fund (XLK): ETF Research Reports
 
Vanguard Information Technology ETF (VGT): ETF Research Reports
 
Fidelity MSCI Information Technology Index ETF (FTEC): ETF Research Reports
 
Invesco QQQ (QQQ): ETF Research Reports
 
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