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Time to Take a Bite Out of Apple? ETFs in Focus

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Apple (AAPL - Free Report) stock should taste sweeter ahead. Apple could touch a $3 trillion market capitalization in 2022, according to Wedbush analyst Dan Ives, as quoted on CNBC. Apple has a market cap of over $2 trillion, currently. It topped $1 trillion mark in 2018 and the $2 trillion threshold in 2020.

What About Apple’s Business Model?

The company is benefiting from continued momentum in the Services segment, driven by strong App Store sales and robust adoption of Apple Music and Apple Pay. Non-iPhone devices, particularly Apple Watch and AirPod, are the other notable drivers in the long haul.

Apple’s focus on autonomous vehicles and augmented reality/virtual reality technologies presents growth opportunity for the long term. Apple has been transforming itself from a basic hardware company to a software services company.

New iPhones are also expected later this year, while an Apple Car is also in process, per the CNBC article. There are some likely risks that could deter Apple from hitting the $3-trillion-milestone, according to Ives, as quoted on CNBC.

What Do Indicators Say About Apple’s Value Status?

Going by valuation metrics, P/E (ttm) of AAPL is 28.4 times versus the industry-average of 26.0 times. Forward P/E of AAPL is 24.5 times versus the industry score of 22.1 times. Though these measures point to higher valuation of Apple than the industry, a higher P/E is always not a sign of worry. It shows investors’ confidence in a particular stock among the bunch.

Investors should note that return-on-equity of Apple is 111.8%, higher than industry average of 97.3%. Plus, both return-on-assets and return-on-capital of Apple are higher than the industry measures. The estimated 3–5-year EPS growth of Apple is now 12.5% versus 11.7% of the industry measure.

Investors should note that the AAPL stock has a Zacks Rank #2 (Buy). It has a Growth Score of B at the time of writing with a Momentum Score of B. To tap the optimism, investors can play Apple-heavy ETFs as the basket approach reduces company-specific risks.

Below we highlight a few ETFs with heavy exposure to Apple for investors seeking to bet on the stock with much lower risk.

iShares Dow Jones US Technology ETF (IYW - Free Report) – APPL takes the second spot with 17.72% weight. The fund has a Zacks Rank #2 (Buy).

Select Sector SPDR Technology ETF (XLK - Free Report) – APPL holds the top spot with 21.13% weight. The fund has a Zacks Rank #2.

Vanguard Information Technology ETF (VGT - Free Report) – APPL occupies the first location with 20.13% weight. The fund has a Zacks Rank #2.

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