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5 Bargain ETFs to Tap Renewed Tech Strength

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The technology sector has been underperforming the market of late in the wake of earnings announcement. This is especially true as the big five tech titans, namely Apple (AAPL - Free Report) , Microsoft (MSFT - Free Report) , Alphabet (GOOGL - Free Report) , Amazon.com (AMZN - Free Report) and Facebook (FB - Free Report) failed to impress investors this reporting cycle. Total Q2 earnings from the group of these five companies are expected to be up 88% on revenue growth of 35.4%. This indicates deceleration from the first-quarter earnings growth rate of 104% and the revenue rise of 41.5%.

Beyond the big five players, total sector earnings for the companies reported so far seem good otherwise. Total Q2 earnings from 85.1% of the sector’s market capitalization in the S&P 500 Index are up 66% from the same-period last year on 26.3% higher revenues with 96.2% beating EPS estimates while 94.3% surpassing revenue expectations.

The beaten down prices compelled investors to grab the stocks on cheap, pushing up not only the technology sector higher but also sending the S&P 500 to new highs in Aug 12 trading session. This suggests renewed momentum for the sector ahead at least in the near term.

Additionally, the spike in the Delta variant of COVID-19 cases once again propelled demand for stay-at-home trends, leading to acceleration in e-commerce for everything, ranging from remote working to entertainment and shopping. The rapid adoption of cloud computing, big data, IoT, wearables, VR headsets, drones, virtual reality, AI, machine learning, digital communication and 5G technology will also continue to drive the sector higher (read: Technology ETFs to Grab Amid Rising Delta Variant Cases).

Investors should cash in on an opportune moment with the bargain ETFs. We highlighted some ETFs that have been in the red over the past month but possess a solid upside potential, given the encouraging fundamentals:

Roundhill Streaming Services & Technology ETF (SUBZ - Free Report) — Down 7.5%

This ETF is actively managed and offers exposure to the streaming industry. The fund consists of companies from across the globe that are actively involved in the business of streaming. It holds 40 stocks in its basket and charges 75 bps in annual fees. The ETF trades in an average daily volume of 18,000 shares and amassed $29.1 million in its asset base.

Global X Social Media Index ETF (SOCL - Free Report) — Down 6.8%

This fund provides investors access to social media companies around the world and amassed $442 million in its asset base. It tracks the Solactive Social Media Total Return Index, holding 42 securities in the basket. The ETF charges 0.65% in annual fees and sees lower trading volumes of roughly 37,000 shares a day. The fund has a Zacks ETF Rank #3 (Hold) with a High risk outlook.

Wedbush ETFMG Video Game Tech ETF (GAMR - Free Report) — Down 5.7%

This fund provides pure-play and a diversified exposure to a dynamic intersection of technology and entertainment. It tracks the EEFund Video Game Tech Index, which measures the performance of the companies involved in the video game technology industry comprising game developers, console and chip manufacturers, and game retailers. The ETF holds 135 stocks in its basket and amassed $113.6 million in its asset base. The product charges 75 bps in annual fees and trades in volume of about 45,000 shares a day, on average (read: Video Gaming ETFs to Surge on Soaring Sales Amid Pandemic).

iShares Virtual Work and Life Multisector ETF (IWFH - Free Report) — Down 2.3%

This fund provides access to companies at the forefront of virtual and remote working, and living innovation. It offers exposure to global stocks along the full value chain of virtual and remote entertainment, wellness and learning industries by tracking the NYSE FactSet Global Virtual Work and Life Index. Holding 75 stocks in its basket, IWFH accumulated $8.3 million in its asset base. It charges 47 bps in annual fees and trades in a paltry volume of 1,000 shares.

SPDR S&P Internet ETF (XWEB - Free Report) — Down 1.3%

This product targets the Internet corner of the broad tech space and follows the S&P Internet Select Industry Index. It charges 35 bps in annual fees and trades in a volume of 3,000 shares per day on average. With an AUM of $64.5 million, the fund holds 58 stocks in its basket and carries a Zacks ETF Rank #3.