The latest broad market rally has pushed the tech-heavy Nasdaq Composite Index to new record highs above the 11,000 milestone. The Nasdaq’s march from 10,000 to 11,000 has been the fastest-ever in 20 years. The benchmark hit 10,000 on June 10 and took 40 trading days to climb to the 1,000 point.
With this, the Nasdaq Composite soared more than 60% since hitting a Mar 23 low, outperforming the other major indices. The S&P 500 and the Dow Jones Industrial Average index have climbed 50% and 47%, respectively. Most of the gains were driven by surging technology stocks, especially the mega-cap and the so-called FAANG stocks. These tech companies strengthened on stay-at-home trends (read: Best & Worst ETF Areas of July).
Better-than-expected earnings and unprecedented stimulus have added to the strength, leading to a spike in stocks. Additionally, hopes of more stimuli and the positive development in coronavirus vaccines by a number of biotech and pharma companies instilled confidence.
As a result, Invesco QQQ QQQ, which serves as a proxy to the index, has gained 29.7% so far this year. Let’s take a closer look at the fundamentals of QQQ.
QQQ in Focus
This ETF provides exposure to the 103 largest domestic and international non-financial companies listed on the Nasdaq by tracking the Nasdaq 100 Index. Information technology accounts for 48.3% of the assets, while communication services and consumer discretionary holds 19.3% and 18.2% share, respectively. QQQ is one of the largest and most-popular ETFs in the large-cap space with AUM of $126.8 billion and average daily volume of around 37.5 million shares. It charges investors 20 bps in annual fees. The fund has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.
Though most of the stocks in the fund’s portfolio have delivered strong returns so far this year, a few are the real stars, having gained more than 50%. Below we have highlighted the 10 best-performing stocks in the ETF with their respective positions in the fund’s basket:
Top-Performing Stocks in QQQ
Tesla Inc. TSLA: This company designs, produces and sells electric cars, solar energy generation systems and energy storage products. The stock has surged nearly 256% this year and has 2.4% exposure in the fund’s basket. Its earnings are expected to increase to $8.66 per share this year from 13 cents reported last year. Tesla has a Zacks Rank #3 (Hold) (read: ETFs to Surge as Tesla Turns to Profit, Secures S&P 500 Entry).
DocuSign Inc. DOCU: This company provides e-signature solutions offering services to mortgage, non-profit, government, real estate, insurance, technology and healthcare industries. This stock makes up for 0.4% share in the fund’s basket and has delivered robust returns of 191% this year. It has an expected earnings growth rate of 48.4% for the fiscal year (ending Jan 2021). The stock has a Zacks Rank #3.
MercadoLibre Inc. MELI: This is one of the largest e-commerce platforms in Latin America. The stock has climbed 113.3% this year and has an expected earnings growth rate of 74.4%. MercadoLibre has a Zacks Rank #2 (Buy) and accounts for 0.5% of the fund.
DexCom Inc. DXCM: This medical device company is focused on the design, development and commercialization of continuous glucose monitoring systems. DexCom has risen 100.7% so far this year and holds 0.4% share of the basket. It has an estimated earnings growth rate of 42.9% for this year and a Zacks Rank #3.
NVIDIA Corporation NVDA: It is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit, or GPU. The stock has a projected earnings growth rate of 36.4% for the fiscal year (ending Jan 2021) and has rallied 92.7% so far this year. It accounts for 2.5% of the fund’s portfolio and has a Zacks Rank #3.
Advanced Micro Devices Inc. AMD: This semiconductor company has emerged as a strong contender to NVIDIA’s dominance in the graphic processing unit market based on its Radeon technology. The stock has surged about 89% so far this year. It has a massive earnings growth rate of 71.9% for this year. Advanced Micro Devices makes up for 0.9% share in QQQ and carries a Zacks Rank #3 (read: Semiconductor ETFs in Focus as AMD Soars).
PayPal Holdings Inc. PYPL: This company is one of the largest online payment solutions providers. It has an expected earnings growth rate of 18.7% for this year and a Zacks Rank #2. PayPal makes up for 2.1% allocation and has delivered robust returns of 88.6% this year so far.
JD.com Inc. JD: It operates as an online direct sales company in China. For this year, the company has an expected earnings growth rate of 20.2% and its shares have jumped 84.2% so far. It carries a Zacks Rank #1 (Strong Buy) and accounts for 0.5% share. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Amazon.com Inc. AMZN: It is one of the largest e-commerce providers with extensive operations in North America and a rapidly increasing reach across the globe. The stock has risen 74.5% so far this year. Zacks Rank #3 Amazon has projected earnings growth of 39.1% for this year.
Regeneron Pharmaceuticals Inc. REGN: This biopharmaceutical company is focused on the discovery, development and commercialization of treatments targeting serious medical conditions. It has gained 65.4% so far this year and has an estimated earnings growth rate of 14.3% for the full year. The stock accounts for 0.6% of assets in QQQ and has a Zacks Rank #4.
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