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ETFs to Buy on Tesla's Q2 Earnings Strength

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After the closing bell on Monday, Tesla Motors (TSLA - Free Report) reported robust Q2 earnings, wherein it beat the estimates on both earnings and revenues.

Q2 Earnings in Focus

Adjusted earnings per share came in at $1.45, easily beating the Zacks Consensus Estimate of 90 cents and improving from the year-ago earnings of 44 cents. Revenues jumped 98% year over year to $11.96 billion and edged past the Zacks Consensus Estimate of $11.39 billion.

Earlier this month, Tesla reported record deliveries for second-quarter 2021. It delivered a record 201,250 (199,360 Model 3 and Y, and 1,890 Model S and X) vehicles. Deliveries were up 121% from the year-ago quarter, marking the highest growth rate in two years and an acceleration from the 109% year-over-year growth reported in Q1. The company produced 206,421 (204,081 Model 3 and Y, and 2,340 Model S and X) vehicles during the quarter (read: Tesla Breaks Record on Q2 Deliveries: ETFs to Tap).

Notably, Tesla logged its best quarter of deliveries ever and achieved an operating margin of 11.0%. It also exceeded $1 billion of GAAP net income for the first time in the history.

Tesla remains on track to build the first Model Y sedans from its new facilities in Austin and Berlin before the end of the year. It continues to see growing pent-up demand throughout China and Europe despite stiff competition from the likes of General Motors (GM - Free Report) and Nio (NIO - Free Report) , with the United States on the verge of seeing further increased demand once the EV tax credit ceiling is lifted.

However, the electric carmaker warned that the global shortage in semiconductor supplies remains "quite serious" and could impact production rates in the second half of the year, adding that volume growth will depend on the availability of other parts in the global supply chain.

Despite the Q2 results, shares of Tesla gained as much as 2.5% in aftermarket trading on elevated volumes. Tesla currently has a Zacks Rank #2 (Buy) and has a VGM Score of B. It belongs to a top-ranked Zacks industry (in the top 17%).

ETFs to Buy

We have highlighted seven ETFs having a double-digit allocation to this luxury carmaker that could be compelling picks to tap Tesla’s strength.

Simplify Volt Robocar Disruption and Tech ETF (VCAR - Free Report)

This is an actively managed ETF seeking concentrated exposure to the leader of autonomous driving technology. It is heavily exposed to the Tesla stock and Tesla call options at 25% share. The fund seeks to boost its performance during extreme moves in Tesla, charging investors 1.09% in annual fees. It has accumulated $2 million in its asset base while trades in an average daily volume of 3,000 shares.

iShares U.S. Consumer Goods ETF (IYK - Free Report)

This ETF offers exposure to U.S. companies that produce a wide range of consumer goods, including food, automobiles, and household goods by tracking the Dow Jones U.S. Consumer Goods Index. It holds about 99 stocks in its basket with Tesla occupying the top position at 15% allocation. The fund has amassed $693.7 million in its asset base while trades in a volume of about 14,000 shares. It charges 43 bps in annual fees and carries a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

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 $19.5 billion and an average daily volume of around 3.9 million shares. Holding 63 securities in its basket, Tesla takes the second spot with 12.5% of assets. The fund charges 12 bps in annual fees and has a Zacks ETF Rank #2 with a Medium risk outlook (read: Will ETFs Suffer as US Consumer Sentiment Falls in July?).

ARK Industrial Innovation ETF (ARKQ - Free Report)

This is an actively managed ETF seeking long-term capital appreciation by investing in companies that benefit from the development of new products or services as well as technological improvement and advancements in scientific research related to energy, automation and manufacturing, materials and transportation. This approach results in a basket of 44 stocks, with TSLA occupying the top spot at 11.4% share. The product has accumulated $2.8 billion in its asset base and charges 75 bps in fees per year. It trades in volume of 359,000 shares a day on average.

ARK Innovation ETF (ARKK - Free Report)

This is an actively managed fund investing in companies that benefit from the development of new products or services, technological improvements and advancements in scientific research. In total, the fund holds 48 securities in its basket with Tesla occupying the top position, accounting for 10.3% share. The product has gathered $23 billion in its asset base and charges 75 bps in fees per year from investors. It trades in a volume of 8.6 million shares per day on average.

ARK Next Generation Internet ETF (ARKW - Free Report)

This is an actively managed fund focusing on companies that are expected to benefit from the shift in technology infrastructure to the cloud, enabling mobile, new and local services. The fund holds 50 stocks in its basket with Tesla occupying the top position at 10%. The ETF has amassed $5.9 billion in its asset base and charges 79 bps in annual fees. It trades in an average daily volume of 981,000 shares (read: Delta Variant to Spark Rally in Stay-At-Home ETFs).

MicroSectors FANG+ ETN (FNGS - Free Report)

This ETN is linked to the performance of the NYSE FANG+ Index, which is an equal-dollar weighted index, designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. It holds 10 equal-weighted stocks in its basket with Tesla accounting for 10% share. The product has accumulated $75.7 million in its asset base and charges 58 bps in annual fees. It trades in an average daily volume of 36,000 shares and has a Zacks ETF Rank #3.

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