Back to top

Image: Bigstock

ETFs to Tap on Amazon's Strong Q4 Earnings

Read MoreHide Full Article

After the closing bell on Thursday, Amazon (AMZN - Free Report) reported robust fourth-quarter results, wherein it beat both earnings and revenue estimates. The company had a record-breaking holiday shopping season and closed out a robust 2023. It provided optimistic guidance for the first quarter of 2024.

Shares of AMZN rose as much as 9% in aftermarket hours on elevated volume. Investors may tap the strength with ETFs having 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) .

The e-commerce giant reported earnings per share of $1.00, outpacing the Zacks Consensus Estimate of 81 cents and the year-ago earnings of 3 cents. Revenues grew 14% year over year to $170 billion and edged past the consensus estimate of $166.3 billion. New generative AI features in its cloud and e-commerce businesses spurred robust growth during the critical holiday period (read: 5 ETFs to Ride High on Strong Holiday Retail Sales).

Amazon’s cloud computing business — Amazon Web Services — revenues grew 13% year over year to $24.2 billion.

The world's largest online retailer expects revenues in the range of $138-$143.5 billion for the first quarter of 2024, implying year-over-year growth of 8%-13%. The Zacks Consensus Estimate is pegged at $142.1 billion.

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 18 stocks in its basket. Amazon is the top firm, accounting for 24.7% of the portfolio (read: 4 ETF Areas & Stocks to Win on Upbeat December Retail Sales).

ProShares Online Retail ETF has amassed $91.5 million in its asset base and currently trades in a moderate volume of around 18,000 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 292 stocks in its basket. Of these, Amazon takes the top spot with a 21.7% share.

Fidelity MSCI Consumer Discretionary Index ETF has amassed $1.4 billion in its asset base while trading in a good volume of around 112,000 shares a day on average. It charges 8 bps in annual fees from investors and currently has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.

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 309 stocks in its basket. Of these, Amazon occupies the top position, with a 21.7% allocation. Broadline Retail takes the largest share at 24%, while automobile manufacturers, restaurants and home improvement retail round off the next three spots.

VCR charges investors 10 bps in annual fees, while volume is moderate at nearly 74,000 shares a day. The product has managed about $5.2 billion in its asset base and currently carries a Zacks ETF Rank #1 (Strong Buy) 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. It is the largest and most popular product in this space, with AUM of nearly $18.7 billion and an average daily volume of around 5 million shares. Holding 53 securities in its basket, Amazon takes the top spot with 24.5% of assets. Broadline retail, hotels, restaurants & leisure, specialty retail and automobiles are the top four sectors with double-digit exposure each.

Consumer Discretionary Select Sector SPDR Fund charges 9 bps in annual fees and has a Zacks ETF Rank #1 with a Medium risk outlook (read: 5 Sector ETF to Win in Q4 Earnings Season).

VanEck Vectors Retail ETF (RTH - Free Report)

VanEck Vectors Retail ETF provides exposure to the 26 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 a 20.3% share.

VanEck Vectors Retail ETF has amassed $177.4 million in its asset base and charges 35 bps in annual fees. It trades in a lower volume of 6,000 shares a day on average. VanEck Vectors Retail ETF presently has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

Published in