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Amazon Posts Biggest Profits in 26 Years: 5 ETFs to Buy
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After the closing bell on Thursday, Amazon (AMZN - Free Report) came up with a huge earnings surprise when it reported Q2 earnings. In fact, the online e-commerce behemoth posted the biggest profit in its 26-year history buoyed by a massive boost from the accelerated adoption of e-commerce amid the COVID-19 pandemic.
Earnings per share came in at $10.30, strongly above the Zacks Consensus Estimate of $1.74 and higher than the year-ago earnings of $5.22. Revenues climbed 40% year over year to $88.9 billion and edged past the consensus estimate of $81.5 billion. In particular, revenues from the cloud computing business — Amazon Web Services — surged 29% year over year to $10.8 billion (see: all the Consumer Discretionary ETFs here).
The company offered upbeat revenue guidance of $87-$93 billion, suggesting 24-33% growth year over year for the ongoing quarter. The low end of the range is above the current Zacks Consensus Estimate of $86.78 billion, which indicates 24% growth.
Market Impact
The strong results pushed shares of AMZN higher as much as 6% in aftermarket hours on elevated volume. The stock currently has a Zacks Rank #3 (Hold) and a Momentum Score of A, suggesting that Amazon is primed for growth. However, Amazon belongs to a top-ranked industry (top 45%).
Given this, investors could tap Amazon in the form of ETFs with the highest allocation to this Internet giant. Below we have highlighted five of them:
Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report)
This fund tracks the MSCI USA IMI Consumer Discretionary Index, holding 242 stocks in its basket. Of these, AMZN takes the top spot with 33.6% share. Internet & direct marketing retail makes up for the top sector with 39.4% share followed by specialty retail (19.7%), and hotels, restaurants & leisure (13.4%). The product has amassed $875.5 million in its asset base while trading in a good volume of around 173,000 shares a day on average. It charges 8 bps in annual fees from investors and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
This is the first ETF focused exclusively on retailers that principally sell online. It follows the ProShares Online Retail Index, holding 26 stocks in its basket. Amazon is the top firm accounting for about 24.1% of the portfolio. The product has amassed $229.5 million in its asset base while currently trading in a paltry volume of around 103,000 shares a day on average. It charges 58 bps in annual fees from investors (read: 5 ETF Areas Hitting Highs on Resurging Coronavirus Cases).
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
This product offers exposure to the broad consumer discretionary space by tracking the Consumer Discretionary Select Sector Index. It is the largest and most-popular product in this space, with AUM of nearly $14.5 billion and average daily volume of around 4.1 million shares. Holding 61 securities in its basket, Amazon takes the top spot with 24% of assets. Internet & direct marketing retail dominates about 29.3% of the portfolio, while specialty retail, and hotels restaurants and leisure round off the next two spots with a double-digit allocation each. The fund charges 0.13% in expense ratio and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
This fund currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Index and holds 293 stocks in its basket. Of these, Amazon occupies the top position with 22.9% allocation. Internet & direct marketing retail takes the largest share at 30% while home improvement retail and restaurants round off the next two spots with double-digit exposure each. VCR charges investors 10 bps in annual fees, while volume is moderate at nearly 93,000 shares a day. The product has managed about $3.5 billion in its asset base and carries a Zacks ETF Rank #3 with a Medium risk outlook (read: How to Ride on a Soaring Amazon With ETFs).
This fund provides exposure to the 25 largest retail firms by tracking the MVIS US Listed Retail 25 Index. Of these, AMZN takes the top position in the basket with 20.9% share. The product has amassed $136.5 million in its asset base and charges 35 bps in annual fees. Volume is light as it exchanges nearly 19,000 shares per day. RTH has a Zacks ETF Rank #2 with a Medium risk outlook.
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Amazon Posts Biggest Profits in 26 Years: 5 ETFs to Buy
After the closing bell on Thursday, Amazon (AMZN - Free Report) came up with a huge earnings surprise when it reported Q2 earnings. In fact, the online e-commerce behemoth posted the biggest profit in its 26-year history buoyed by a massive boost from the accelerated adoption of e-commerce amid the COVID-19 pandemic.
Earnings per share came in at $10.30, strongly above the Zacks Consensus Estimate of $1.74 and higher than the year-ago earnings of $5.22. Revenues climbed 40% year over year to $88.9 billion and edged past the consensus estimate of $81.5 billion. In particular, revenues from the cloud computing business — Amazon Web Services — surged 29% year over year to $10.8 billion (see: all the Consumer Discretionary ETFs here).
The company offered upbeat revenue guidance of $87-$93 billion, suggesting 24-33% growth year over year for the ongoing quarter. The low end of the range is above the current Zacks Consensus Estimate of $86.78 billion, which indicates 24% growth.
Market Impact
The strong results pushed shares of AMZN higher as much as 6% in aftermarket hours on elevated volume. The stock currently has a Zacks Rank #3 (Hold) and a Momentum Score of A, suggesting that Amazon is primed for growth. However, Amazon belongs to a top-ranked industry (top 45%).
Given this, investors could tap Amazon in the form of ETFs with the highest allocation to this Internet giant. Below we have highlighted five of them:
Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report)
This fund tracks the MSCI USA IMI Consumer Discretionary Index, holding 242 stocks in its basket. Of these, AMZN takes the top spot with 33.6% share. Internet & direct marketing retail makes up for the top sector with 39.4% share followed by specialty retail (19.7%), and hotels, restaurants & leisure (13.4%). The product has amassed $875.5 million in its asset base while trading in a good volume of around 173,000 shares a day on average. It charges 8 bps in annual fees from investors and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
ProShares Online Retail ETF (ONLN - Free Report)
This is the first ETF focused exclusively on retailers that principally sell online. It follows the ProShares Online Retail Index, holding 26 stocks in its basket. Amazon is the top firm accounting for about 24.1% of the portfolio. The product has amassed $229.5 million in its asset base while currently trading in a paltry volume of around 103,000 shares a day on average. It charges 58 bps in annual fees from investors (read: 5 ETF Areas Hitting Highs on Resurging Coronavirus Cases).
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
This product offers exposure to the broad consumer discretionary space by tracking the Consumer Discretionary Select Sector Index. It is the largest and most-popular product in this space, with AUM of nearly $14.5 billion and average daily volume of around 4.1 million shares. Holding 61 securities in its basket, Amazon takes the top spot with 24% of assets. Internet & direct marketing retail dominates about 29.3% of the portfolio, while specialty retail, and hotels restaurants and leisure round off the next two spots with a double-digit allocation each. The fund charges 0.13% in expense ratio and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.
Vanguard Consumer Discretionary ETF (VCR - Free Report)
This fund currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Index and holds 293 stocks in its basket. Of these, Amazon occupies the top position with 22.9% allocation. Internet & direct marketing retail takes the largest share at 30% while home improvement retail and restaurants round off the next two spots with double-digit exposure each. VCR charges investors 10 bps in annual fees, while volume is moderate at nearly 93,000 shares a day. The product has managed about $3.5 billion in its asset base and carries a Zacks ETF Rank #3 with a Medium risk outlook (read: How to Ride on a Soaring Amazon With ETFs).
VanEck Vectors Retail ETF (RTH - Free Report)
This fund provides exposure to the 25 largest retail firms by tracking the MVIS US Listed Retail 25 Index. Of these, AMZN takes the top position in the basket with 20.9% share. The product has amassed $136.5 million in its asset base and charges 35 bps in annual fees. Volume is light as it exchanges nearly 19,000 shares per day. RTH has a Zacks ETF Rank #2 with a Medium risk outlook.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>