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After the closing bell on Thursday, Amazon (AMZN - Free Report) posted solid fourth-quarter results. The e-commerce giant came up with huge earnings beat buoyed by strong growth in its cloud computing and growing advertising business. However, it lagged revenue estimates.
The big earnings beat pushed AMZN shares higher as much as 19% in aftermarket hours on elevated volume and were up 14% at the close. If the stock sustains this rally on Friday, it would be the biggest one-day gain since 2012, adding nearly $200 billion to Amazon’s market value.
Investors seeking to tap this surge could flock to ETFs with a substantial allocation to this online behemoth. These include ProShares Online Retail ETF (ONLN - Free Report) , Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report) , Vanguard Consumer Discretionary ETF (VCR - Free Report) , Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) and VanEck Vectors Retail ETF (RTH - Free Report) .
Earnings in Focus
Earnings per share came in at $27.75, widely beating the Zacks Consensus Estimate of $3.89 and almost doubling year over year from $14.09. Revenues grew 9% year over year to $137.4 billion but fell short of the consensus estimate of $138.1 billion. This marks the first single-digit growth since 2017 (read: Online Sales Stay Strong in US Holiday Season: 4 ETF Picks).
Amazon’s cloud computing business — Amazon Web Services — continued to shine, with revenues surging 39.5% year over year to $17.8 billion. Amazon raised the price of its annual Prime subscriptions from $119 to $139 in the United States. This is the third time that the company has announced a fee hike for its yearly delivery service in the United States. Amazon raised fees in 2014 and 2018 by $20 each time. The new price will be effective Feb 18.
The e-commerce giant offered downbeat revenue guidance of $112-$117 billion for the first quarter of 2022, suggesting 3-8% growth from the year-ago reported number. The low end of the range is well below the current Zacks Consensus Estimate of $121.33 billion, which indicates 11.8% growth.
ProShares Online Retail ETF offers exposure to companies that principally sell online or through other non-store channels, and then zeros in on the companies that reshape the retail space. It tracks the ProShares Online Retail Index, holding 40 stocks in its basket. Amazon is the top firm accounting for 26.1% of the portfolio (read: Forget Amazon, Buy 5 Reopening-Friendly Consumer ETFs Instead).
ProShares Online Retail ETF has amassed $603.2 million in its asset base and currently trades in a moderate volume of around 100,800 shares a day on average. It charges 58 bps in annual fees from investors.
Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report)
Fidelity MSCI Consumer Discretionary Index ETF tracks the MSCI USA IMI Consumer Discretionary Index, holding 313 stocks in its basket. Of these, Amazon takes the top spot with 20.9% share. Internet & direct marketing retail makes up for the top sector, with 23.7% share, followed by specialty retail (20.4%) and hotels restaurants & leisure (17.2%).
Fidelity MSCI Consumer Discretionary Index ETF has amassed $1.6 billion in its asset base while trading in a good volume of around 270,000 shares a day on average. It charges 8 bps in annual fees from investors and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: Will ETFs Suffer as US Consumer Confidence Weakens in January).
Vanguard Consumer Discretionary ETF currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Index and holds 304 stocks in its basket. Of these, Amazon occupies the top position, with 21.1% allocation. Internet & direct marketing retail takes the largest share at 24.1%, while automobile manufacturers, home improvement retail and restaurants round off the next two spots.
VCR charges investors 10 bps in annual fees, while volume is moderate at nearly 152,000 shares a day. The product has managed about $6.3 billion in its asset base and carries a Zacks ETF Rank #2 with a Medium risk outlook.
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
Consumer Discretionary Select Sector SPDR Fund offers exposure to the broad consumer discretionary space by tracking the Consumer Discretionary Select Sector Index. Holding 60 securities in its basket, Amazon takes the top spot with 22.2% of assets. Internet & direct marketing retail dominates about 23.7% of the portfolio, while automobiles, hotels, restaurants and leisure, and specialty retail round off the next two spots with a double-digit allocation each.
Consumer Discretionary Select Sector SPDR Fund is the largest and most popular product in this space, with AUM of $20.5 billion and an average daily volume of around 9.7 million shares. It charges 0.10% in expense ratio and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: 5 ETFs to Tap the Four-Decade Strongest U.S. Economy).
VanEck Vectors Retail ETF provides exposure to the 25 largest retail firms by tracking the MVIS US Listed Retail 25 Index, which measures the performance of the companies involved in retail distribution, wholesalers, online, direct mail and TV retailers, multi-line retailers, specialty retailers and food and other staples retailers. Amazon takes the top position in the basket with an 18.8% share.
VanEck Vectors Retail ETF has amassed $232 million in its asset base and charges 35 bps in annual fees. It trades in a lower volume of 16,000 shares a day on average. VanEck Vectors Retail ETF has a Zacks ETF Rank #3 with a Medium risk outlook.
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ETFs to Buy on Amazon's Big Q4 Earnings Beat
After the closing bell on Thursday, Amazon (AMZN - Free Report) posted solid fourth-quarter results. The e-commerce giant came up with huge earnings beat buoyed by strong growth in its cloud computing and growing advertising business. However, it lagged revenue estimates.
The big earnings beat pushed AMZN shares higher as much as 19% in aftermarket hours on elevated volume and were up 14% at the close. If the stock sustains this rally on Friday, it would be the biggest one-day gain since 2012, adding nearly $200 billion to Amazon’s market value.
Investors seeking to tap this surge could flock to ETFs with a substantial allocation to this online behemoth. These include ProShares Online Retail ETF (ONLN - Free Report) , Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report) , Vanguard Consumer Discretionary ETF (VCR - Free Report) , Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) and VanEck Vectors Retail ETF (RTH - Free Report) .
Earnings in Focus
Earnings per share came in at $27.75, widely beating the Zacks Consensus Estimate of $3.89 and almost doubling year over year from $14.09. Revenues grew 9% year over year to $137.4 billion but fell short of the consensus estimate of $138.1 billion. This marks the first single-digit growth since 2017 (read: Online Sales Stay Strong in US Holiday Season: 4 ETF Picks).
Amazon’s cloud computing business — Amazon Web Services — continued to shine, with revenues surging 39.5% year over year to $17.8 billion. Amazon raised the price of its annual Prime subscriptions from $119 to $139 in the United States. This is the third time that the company has announced a fee hike for its yearly delivery service in the United States. Amazon raised fees in 2014 and 2018 by $20 each time. The new price will be effective Feb 18.
The e-commerce giant offered downbeat revenue guidance of $112-$117 billion for the first quarter of 2022, suggesting 3-8% growth from the year-ago reported number. The low end of the range is well below the current Zacks Consensus Estimate of $121.33 billion, which indicates 11.8% growth.
ETFs to Buy
ProShares Online Retail ETF (ONLN - Free Report)
ProShares Online Retail ETF offers exposure to companies that principally sell online or through other non-store channels, and then zeros in on the companies that reshape the retail space. It tracks the ProShares Online Retail Index, holding 40 stocks in its basket. Amazon is the top firm accounting for 26.1% of the portfolio (read: Forget Amazon, Buy 5 Reopening-Friendly Consumer ETFs Instead).
ProShares Online Retail ETF has amassed $603.2 million in its asset base and currently trades in a moderate volume of around 100,800 shares a day on average. It charges 58 bps in annual fees from investors.
Fidelity MSCI Consumer Discretionary Index ETF (FDIS - Free Report)
Fidelity MSCI Consumer Discretionary Index ETF tracks the MSCI USA IMI Consumer Discretionary Index, holding 313 stocks in its basket. Of these, Amazon takes the top spot with 20.9% share. Internet & direct marketing retail makes up for the top sector, with 23.7% share, followed by specialty retail (20.4%) and hotels restaurants & leisure (17.2%).
Fidelity MSCI Consumer Discretionary Index ETF has amassed $1.6 billion in its asset base while trading in a good volume of around 270,000 shares a day on average. It charges 8 bps in annual fees from investors and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: Will ETFs Suffer as US Consumer Confidence Weakens in January).
Vanguard Consumer Discretionary ETF (VCR - Free Report)
Vanguard Consumer Discretionary ETF currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Index and holds 304 stocks in its basket. Of these, Amazon occupies the top position, with 21.1% allocation. Internet & direct marketing retail takes the largest share at 24.1%, while automobile manufacturers, home improvement retail and restaurants round off the next two spots.
VCR charges investors 10 bps in annual fees, while volume is moderate at nearly 152,000 shares a day. The product has managed about $6.3 billion in its asset base and carries a Zacks ETF Rank #2 with a Medium risk outlook.
Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)
Consumer Discretionary Select Sector SPDR Fund offers exposure to the broad consumer discretionary space by tracking the Consumer Discretionary Select Sector Index. Holding 60 securities in its basket, Amazon takes the top spot with 22.2% of assets. Internet & direct marketing retail dominates about 23.7% of the portfolio, while automobiles, hotels, restaurants and leisure, and specialty retail round off the next two spots with a double-digit allocation each.
Consumer Discretionary Select Sector SPDR Fund is the largest and most popular product in this space, with AUM of $20.5 billion and an average daily volume of around 9.7 million shares. It charges 0.10% in expense ratio and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: 5 ETFs to Tap the Four-Decade Strongest U.S. Economy).
VanEck Vectors Retail ETF (RTH - Free Report)
VanEck Vectors Retail ETF provides exposure to the 25 largest retail firms by tracking the MVIS US Listed Retail 25 Index, which measures the performance of the companies involved in retail distribution, wholesalers, online, direct mail and TV retailers, multi-line retailers, specialty retailers and food and other staples retailers. Amazon takes the top position in the basket with an 18.8% share.
VanEck Vectors Retail ETF has amassed $232 million in its asset base and charges 35 bps in annual fees. It trades in a lower volume of 16,000 shares a day on average. VanEck Vectors Retail ETF has a Zacks ETF Rank #3 with a Medium risk outlook.