The U.S. stock market has extended its bull run to start the historically weak September on bets over the additional stimulus and a coronavirus vaccine push. While the S&P 500 has been hitting a new series of record high and the Dow is within a few points away from the peak, the tech-heavy Nasdaq topped the 12,000 threshold for the first time.
The 1,000-point rally came in less than a month as the benchmark hit 11,000 on Aug 6. These gains were driven by a strong momentum in technology stocks along with the rising cyclical sector on stay-at-home trends and lower interest rates. Though software stocks led to a solid run-up in the technology sector earlier, semiconductors have been at the forefront of the latest rally indicating ongoing sector rotation (read: Will Rotation to Cyclical ETFs Continue in September?).
As the cyclical stocks are tied to economic activities, these perform well when growth improves. The latest rounds of data signals that the economy is gradually returning to the pre-pandemic level, thereby providing enough impetus to the sectors that are sensitive to economic conditions.
As a result, Invesco QQQ (QQQ - Free Report) , which serves as a proxy to the index, has been in the spotlight. Let’s take a closer look at the fundamentals of QQQ.
QQQ in Focus
This ETF provides exposure to the 103 largest domestic and international non-financial companies listed on the Nasdaq by tracking the Nasdaq 100 Index. Information technology accounts for 48.5% of the assets, while communication services and consumer discretionary make up for around 19% share each (read: 5 Sector ETFs That Beat the Market in August).
QQQ is one of the largest and most-popular ETFs in the large-cap space with AUM of $143.1 billion and average daily volume of around 34.5 million shares. It charges investors 20 bps in annual fees. The fund has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook. Though most of the stocks in the fund’s portfolio have delivered strong returns in a month, a few are the real stars, having gained more than 25%.
Below we have highlighted the five best-performing stocks in the ETF with their respective positions in the fund’s basket:
Top-Performing Stocks in QQQ
Zoom Video Communications Inc. (ZM - Free Report) : It provides a video-first communications platform in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. The stock has risen 58.4% in a month and accounts for 0.6% in the fund’s basket. It has an expected earnings growth rate of 262.9% for the fiscal year (ending January 2021) and a Zacks Rank #2 (Buy).
Tesla Inc. (TSLA - Free Report) : This company designs, produces and sells electric cars, solar energy generation systems and energy storage products. The stock has surged nearly 50.4% in a month and has 3.5% exposure in the fund’s basket. Its earnings are expected to increase to $1.76 per share this year from 3 cents reported last year. Tesla has a Zacks Rank #3 (Hold).
Expedia Group Inc. (EXPE - Free Report) : This company is one of the largest online travel companies in the world. This stock makes up for 0.1% share in the fund’s basket and has delivered robust returns of 29.1% in a month. However, its earnings are expected to decline 227.6% for this year. The stock has a Zacks Rank #4 (Sell) (read: Travel & Leisure ETFs Set to Gain on COVID-19 Vaccine News).
JD.com Inc. (JD - Free Report) : It operates as an online direct sales company in China. For this year, the company has an expected earnings growth rate of 45.2% and its shares have jumped 28.8% in a month. It carries a Zacks Rank #1 and accounts for 0.6% share. You can see the complete list of today’s Zacks #1 Rank stocks here.
Workday Inc. (WDAY - Free Report) : This company is a provider of enterprise-level software solutions for financial management and human resource domains. It has an expected earnings growth of 19.7% for this fiscal (ending January 2021). The stock has a Zacks Rank #3. Workday makes up for 0.3% allocation and has delivered robust returns of 28.6% in a month.
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 >>