The tech giant Apple Inc.
AAPL
is close to becoming the world’s first $3 trillion publicly-traded company. The shares of AAPL are up nearly 20% over the past month against a 1.4% decline for the Nasdaq Composite Index.
With Apple on the verge of hitting a new milestone, ETFs with the largest allocation to the tech titan are expected to soar. Funds such as
MSCI Information Technology Index ETF
FTEC
,
Technology Select Sector SPDR Fund
XLK
,
Vanguard Information Technology ETF
VGT
,
iShares Dow Jones US Technology ETF
IYW
and
iShares Russell Top 200 Growth ETF
IWY
have Apple as the top firm with a double-digit allocation and sport a Zacks Rank #1 (Strong Buy) or 2 (Buy) (read:
Top-Ranked Technology ETFs Worth Adding to Portfolio Now
).
JP Morgan’s
JPM
price target boost added to the strength. The analyst raised the target price for the stock to $210 from $180, citing improved iPhone 13 demand and the navigation of disruptions in chip and smartphone supply chains. The upcoming iPhone SE with 5G capabilities, expected in early 2022, have the potential to attract nearly 1.4 billion low- to mid-end Android phone and about 300 million older iPhone model users, per the analyst.
Apple has many projects in the pipeline. It plans to release computerized glasses featuring augmented reality technology in 2022, and is developing a virtual reality headset as well. Apple is also working on a self-driving electric vehicle that could be on the market as soon as 2025.
The iPhone maker had hit $1 trillion in 2018 and topped $2 trillion in August 2020, powered by its steady expansion into a range of services. Apple’s services revenues, comprising iTunes, Apple Music, iCloud, Apple Pay and Apple Care, climbed to a record $18.3 billion in fourth-quarter fiscal 2021 from $14.5 billion in the year-ago quarter.
The stock is up more than 32% so far this year, outperforming the gain of 19.6% for the Nasdaq Composite Index and 24.3% for the S&P 500 Index. Apple is benefiting from booming demand for its new IPhone 13 and other older models as well as subscription services such as Apple Music, Apple TV+, iCloud and its popular App Store (read:
Apple Revenues Disappoint First Time Since 2018: ETFs in Focus
).
Solid Apple Fundamentals
Apple’s earnings estimates have been raised by a penny for the fiscal year (ending September 2022) over the past seven days. This represents year-over-year growth of 3.03%. Revenues are expected to grow 5.4% for the current fiscal. The Apple stock is cheap, trading at a P/E ratio of 31.05 compared with other few tech names — Amazon’s
AMZN
84.44 times, Netflix’s
NFLX
56.94 times and Microsoft’s
MSFT
37.22 times.
Further, Apple currently carries a Zacks Rank #3 (Hold) and has a Growth Score of A. It boasts a top-ranked Zacks industry (
top 46%
), suggesting that the stock is poised for strong growth (see:
all the Technology ETFs here
).
ETFs to Buy
MSCI Information Tchnology Index ETF (FTEC)
MSCI Information Technology Index ETF is home to 346 technology stocks with AUM of $7.1 billion. It follows the MSCI USA IMI Information Technology Index. Apple accounts for 20.7% allocation.
MSCI Information Technology Index ETF has 0.08% in expense ratio, while volume is solid at 254,000 shares a day.
Technology Select Sector SPDR Fund (XLK)
Technology Select Sector SPDR Fund targets the broad technology sector and follows the Technology Select Sector Index. It holds about 76 securities in its basket, with Apple making up for 23.6% share. Technology Select Sector SPDR Fund has key holdings in software, technology hardware, storage & peripherals, semiconductors & semiconductor equipment and IT services.
Technology Select Sector SPDR Fund is the most popular and heavily traded ETF with AUM of $50.9 billion in AUM and an average daily volume of 10.4 million shares. The fund charges 12 bps in fees per year.
Vanguard Information Technology ETF (VGT)
Vanguard Information Technology ETF manages about $55.6 billion in its asset base and provides exposure to 338 technology stocks. It currently tracks the MSCI US Investable Market Information Technology 25/50 Index. Here, Apple accounts for 19.3% share.
Vanguard Information Technology ETF has 0.10% in expense ratio, while volume is solid at nearly 519,000 shares.
iShares Dow Jones US Technology ETF (IYW)
iShares Dow Jones US Technology ETF tracks the Dow Jones U.S. Technology Capped Index, giving investors exposure to 151 U.S. electronics, computer software and hardware, and informational technology companies. Apple makes up 18.2% of the assets.
iShares Dow Jones US Technology ETF has AUM of $10.1 billion and charges 41 bps in fees and expenses. Volume is good as it exchanges nearly 472,000 shares a day (read:
Gift These 5 Top-Ranked ETFs This Holiday Season
).
iShares Russell Top 200 Growth ETF (IWY)
iShares Russell Top 200 Growth ETF offers exposure to large U.S. companies that are expected to record earnings growth at an above-average rate relative to the market. It tracks the Russell Top 200 Growth Index, holding 109 stocks in its basket. Apple accounts for 14.3% of total assets. iShares Russell Top 200 Growth ETF has key holdings in information technology, consumer discretionary and communication with double-digit exposure each.
iShares Russell Top 200 Growth ETF has amassed $4.8 billion in its asset base and trades in an average daily volume of 134,000 shares. It has an expense ratio of 0.20%.
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