Tech giant Apple Inc.
AAPL
became the world’s first $3 trillion publicly-traded company. The stock hit an intraday record high of $182.88 on the first trading day of 2022, putting Apple’s market value just above $3 trillion but closed a little lower on the day.
In order to tap Apple’s huge success, investors could consider the ETFs with the largest allocation to the tech titan. Funds such as
MSCI Information Technology Index ETF
FTEC
,
Technology Select Sector SPDR Fund
XLK
,
Vanguard Information Technology ETF
VGT
,
iShares 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).
The major milestone came on the back of expectations that Apple continues to explore in new markets such as automated cars and virtual reality. 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.
One analyst Wedbush forecast a strong 2022 early this week for Apple, in part driven by the potential launch of a new AR headset product later in the year. In December, Morgan Stanley
MS
raised the target price on Apple from $164 to $200, citing that new products like virtual reality and augmented reality headsets aren’t yet factored into the share price (read:
Take a Look at Top-Performing ETF Sectors of 2021
).
JP Morgan
JPM
also 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, has 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.
Additionally, Apple continued to benefit 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. At a market value of $3 trillion, Apple tripled its valuation in less than four years. According to Howard Silverblatt, an analyst who tracks valuations at S&P Dow Jones Indices, Apple now accounts for nearly 7% of the total value of the S&P 500, breaking IBM’s record of 6.4% in 1984.
The iPhone maker 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 returned 35% in 2021, outpacing the S&P 500’s return of about 27%. Apple is benefiting from the 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.
Solid Apple Fundamentals
Apple’s earnings estimates have been raised by 5 cents for the fiscal year (ending September 2022) over the past 30 days. This indicates year-over-year growth of 3.7%. Revenues are expected to grow 5.3% for the current fiscal. The Apple stock is cheap, trading at a P/E ratio of 30.50 compared with other few tech names — Amazon’s
AMZN
81.74 times, Netflix’s
NFLX
56.08 times and Microsoft’s
MSFT
36.83 times.
Further, Apple currently carries a Zacks Rank #2 (Buy) (see:
all the Technology ETFs here
).
ETFs to Buy
MSCI Information Technology Index ETF (FTEC)
MSCI Information Technology Index ETF is home to 346 technology stocks with AUM of $7.3 billion. It follows the MSCI USA IMI Information Technology Index. Apple accounts for 20.7% allocation.
MSCI Information Technology Index ETF has an expense ratio of 0.08% while volume is solid at 261,000 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 23.8% 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 $52.4 billion in AUM and an average daily volume of 11.4 million shares. The fund charges 12 bps in fees per year.
Vanguard Information Technology ETF (VGT)
Vanguard Information Technology ETF manages about $57 billion in its asset base and provides exposure to 362 technology stocks. It currently tracks the MSCI US Investable Market Information Technology 25/50 Index. Here, Apple accounts for a 20.5% share.
Vanguard Information Technology ETF has an expense ratio of 0.10% while volume is solid at nearly 499,000 shares (read:
Why These Tech ETFs Are Bargain Buys
).
iShares US Technology ETF (IYW)
iShares Dow Jones US Technology ETF tracks the Russell 1000 Technology RIC 22.5/45 Capped Index, giving investors exposure to 154 U.S. electronics, computer software and hardware, and informational technology companies. Apple makes up 18.1% of the assets.
iShares Dow Jones US Technology ETF has AUM of $10.2 billion and charges 41 bps in fees and expenses. Volume is good as it exchanges nearly 496,000 shares a day.
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 110 stocks in its basket. Apple accounts for 14.2% 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 $5 billion in its asset base and trades in an average daily volume of 145,000 shares. It has an expense ratio of 0.20%.
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