After being beaten down on the tech sector’s lofty valuation concerns last month, the tech-heavy Nasdaq Composite Index scaled new record highs ahead of the optimism over the big tech earnings wave with more room for upside. The index set its first record since February, representing the 13th record close of 2021.
This has confirmed the
end of an 11% correction
in the index that began after its previous high on Feb 12, with the index closing at a low on Mar 8.
Deluge of Earnings
Tesla Motors
TSLA
posted the biggest profit in its history shrugging of the global chip crisis when it released Q1 earnings after the closing bell on Monday. The electric carmaker beat estimates on both earnings and revenues.
Tech giants like Microsoft
MSFT
and Alphabet
GOOGL
are scheduled to release their earnings today after the bell while Facebook
FB
and Apple
AAPL
will report on Apr 28. Amazon
AMZN
is slated to report on Apr 29. Total Q1 earnings from the group of these five companies are expected to be up
43.5%
on revenue growth of 31.4%. This reflects a solid improvement from the Q4 earnings growth of 41.2% and revenue growth of 29% (read:
Big Tech Q1 Earnings Look Strong: ETFs to Play
).
Further, many other semiconductor companies like Texas Instruments Incorporated
TXN
and Qualcomm Incorporated
QCOM
are scheduled to report this week. Texas Instruments has a Zacks Rank #2 (Buy) and an
Earnings ESP
of +4.25% while Qualcomm has a Zacks Rank #3 (Hold) and an Earnings ESP of 0.00%. Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our
Earnings ESP Filter
.
ETFs in Focus
Investors seeking to ride the Nasdaq could consider the following ETFs. These funds might see massive trading volumes in the days ahead as Q1 earnings unfold.
Fidelity Nasdaq Composite Index Tracking Stock
ONEQ
This ETF tracks the Nasdaq Composite Index, holding a broad basket of 1,016 stocks. It has AUM of $4 billion and an average daily volume of around 564,000 shares. The expense ratio comes in at 0.21%. The product has gained 9.4% in the year-to-date frame and carries a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.
Invesco QQQ
QQQ
This ETF provides exposure to 102 largest domestic and international non-financial companies listed on the Nasdaq by tracking the Nasdaq 100 Index. QQQ is one of the largest and most popular ETFs in the large-cap space, with AUM of $161.4 billion and an average daily volume of 54.7 million shares. It charges investors 20 bps in annual fees and has risen 9% so far this year. The fund sports a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read:
ETFs to Ride the Nasdaq Composite’s Much-Awaited Comeback
).
First Trust NASDAQ-100 Equal Weighted Index Fund
QQEW
Holding 102 stocks, this fund provides equal exposure to stocks on the Nasdaq-100 Index. It has amassed $1.3 billion in its asset base while it trades in lower volumes of nearly 97,000 shares a day on average. It charges 59 bps in annual fees and has gained 8.1% in the year-to-date period. QQEW carries a Zacks ETF Rank #1 with a Medium risk outlook
Invesco NASDAQ 100 ETF
QQQM
This fund is identical to QQQ tracking the NASDAQ-100 Index but comes with lower annual fees of 15 bps. It holds 104 securities in its basket with higher concentration on the big tech giants. QQQM has accumulated $822.3 million in its asset base since its debut last October and trades in an average daily volume of 128,000 shares. The ETF is up 9% so far this year (read:
Best ETFs for Long-Term Investors
).
ProShares Ultra QQQ
QLD
Investors seeking to make big gains in a short span can bet on QLD. It provides twice the return of the NASDAQ-100 Index’s daily performance and exchanges around 2.1 million shares in hand on average. The fund has an AUM of $4.4 billion and charges 95 bps in fees and expenses. It has surged 16.4% so far this year.
ProShares UltraPro QQQ
TQQQ
For a more bullish approach, TQQQ could be an excellent choice. It also tracks the NASDAQ-100 Index but offers thrice the returns of the daily performance, with the same expense ratio of QLD. The fund has amassed $11.4 billion in AUM and trades in a heavy volume of 41 million shares on average. TQQ had returned nearly 22.3% in the year-to-date period.
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