May 27, 2024


Unlimited Technology

Apple ETFs to Buy on Blowout Q3 & Stock Split News

After the closing bell yesterday, Apple Inc. AAPL encouraged its investors with blockbuster third-quarter fiscal 2020 results, wherein it topped both earnings and revenue estimates.

Apple Q3 Results in Focus

Earnings per share came in at $2.58, beating the Zacks Consensus Estimate by 55 cents and improving 18% from the year-ago quarter. Revenues rose 11% year over year to $59.68 billion and edged past the estimate of $51.93 billion. Robust results were driven by strong growth across all geographic segments and major product categories including iPhone. In particular, iPad and Mac sales were strong due to the pandemic, which has resulted in remote working and learning. 

iPhone sales rose 2% to $26.4 billion while services revenues, comprising iTunes, Apple Music, iCloud, Apple Pay and Apple Care, climbed 14.8% year over year to $13.16 billion. Revenues from Wearables, Home and Accessories, which include Apple Watch, AirPods, HomePod, Apple TV and Beats headphones, soared 16.7% to $6.45 billion while iPad and Mac revenues increased 32% and 22.4%, respectively.

The gadget-maker did not provide any guidance for the September quarter and said that its upcoming lineup of “iPhone 12” devices will arrive “a few weeks” later than last year (read: Back-to-School 2020: Another Driver of Tech ETF Rally).

Stock Split

Apple announced a 4-for-1 stock split. Apple shareholders at the close of trading on Aug 24 will receive three additional shares for each one they currently own. Post-split trading will begin on Aug 31. The move will make the stock more accessible to a broader base of investors as shares surged more than 80% or almost $400 over the past year. This is Apple’s first stock split since 2014. It has split four times since the company went public in 1980.

Market Impact

Following the results, shares of Apple have spiked as much as 6.3% to a new record of more than $400 in aftermarket hours on elevated volume. The stock currently has a Zacks Rank #3 (Hold) and VGM Score of B. Additionally, it belongs to a top-ranked Zacks industry (top 11%), suggesting some smooth trading in the days ahead.

ETFs to Tap

Given this, investors could consider the following ETFs with the largest allocation to the tech titan. These funds have Apple as the top or second firm with a double-digit allocation and sport a Zacks Rank #1 (Strong Buy) with a Medium risk outlook.

Select Sector SPDR Technology ETF XLK

This most-popular technology ETF has $32.5 billion in AUM and charges 13 bps in fees per year from investors. AAPL makes up for roughly 21.4% of assets (read: 3 Hot Sector ETFs to Tide Over the Coronavirus Crisis in Q3).

MSCI Information Technology Index ETF FTEC

With AUM of $4.2 billion, the product allocates 19.7% in Apple. The ETF has 0.08% in expense ratio.

iShares Dow Jones US Technology ETF IYW

This ETF provides investors exposure to technology stocks with 18.8% allocation in Apple. The fund has AUM of $5.8 billion and charges 42 bps in fees and expenses.

Vanguard Information Technology ETF VGT

This fund manages about $33.4 billion in its asset base with 19.5% allocation in Apple. It has 0.10% in expense ratio (see: all the Technology ETFs here).

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, and Apple accounts for 12% share. It has AUM of $122.4 billion and charges 20 bps in annual fees.

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