The release of iPhone 7 last week injected new life into tech giant,
Apple Inc. ( AAPL - Free Report) , making it one of the best performers over the past few days. Shares of Apple rallied 11% over the past four sessions, registering the highest four-day gain since Apr 29, 2014. Moreover, a 3.4% jump in shares of the tech behemoth on Thursday led it to finish at $115.56, the highest level since Dec 2015. iPhone 7 Boosts Apple Stock
Strong demand for Apple’s newly released
iPhone 7 Plus and iPhone 7 played a major role in boosting shares of the tech behemoth over the past few sessions. The company said that preorders for its new range of iPhone, which will be available from today, have been significantly higher and that the initial supplies are sold out worldwide. Moreover, iPhone 7 sales data from three carrier services in the U.S. – T-Mobile US, Inc. ( TMUS - Free Report) , Sprint Corporation ( S - Free Report) and AT&T, Inc. ( T - Free Report) – also confirmed the robust demand for iPhone 7.
According to Sprint, iPhone 7 Plus and iPhone 7’s preorders during the first three days following their release were up 375% compared to preorders of iPhone 6S series after their release last year. Meanwhile, in a press release T-Mobile said: “Preorders from Friday through Monday were up nearly four-times compared to the next most popular iPhone — and Friday set a single day sales record for any smartphone ever in T-Mobile US history.” The growing popularity of the new range of iPhones is likely to boost the company’s shares further in the near future.
Will The Rally Last?
Apart from strong sales of iPhone 7, other indicators also suggest that the rally in Apple’s shares may sustain for little more time. Weakness in Samsung, which is one of the biggest competitors of Apple in the smartphone market, is speculated to be one of the major growth drivers for the tech behemoth in the days ahead. The Korean giant recently had to recall 2.5 million Samsung Galaxy Note 7 devices due to defective batteries.
Separately, Apple’s reputation of being able to perform well in a volatile scenario, which has also been proved in recent times, is likely to have a positive impact on the company. Over the past five sessions when the fear gauge CBOE Volatility Index (VIX) surged 28.9%, leading major benchmarks to struggle to finish in positive territories, shares of Apple jumped 9.5% during the same period.
Moreover, favorable forward price-to-earnings (P/E) ratio of 13.5 suggests that the company has more scope for growth in the near term, especially in an environment where demand for the iPhone 7 series is high. Moreover, it has a solid cash balance position of over $200 billion. Also, a longer-than-usual holiday week in December is likely to boost iPhone sales. It is currently anticipated that sales of iPhones may jump 6% year-on-year during the last quarter of 2016 to 79 million units.
4 Top-Ranked Tech ETFs to Buy
Apple’s rally also had a positive impact on tech ETFs that have significant exposure to the tech giant in the past few sessions. In this encouraging backdrop, we have highlighted four tech ETFs that invest a notable portion of their assets in Apple and also carry a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook, indicating that investing in these may prove to be profitable in the days ahead.
iShares US Technology ( IYW - Free Report)
This ETF tracks the Dow Jones US Technology Index, giving investors exposure to 139 technology stocks. The fund has AUM of more than $2.7 billion and charges 43 bps in fees and expenses. Volume is good as it exchanges nearly 244,000 shares in hand a day. Apple occupies the top position in the basket with 16.6% of assets. More than half of the portfolio is allocated to software and services while technology hardware and equipment accounts for 27.3% share. The ETF gained nearly 1.8% and 11.7% yesterday and over the past three-month period, respectively.
Technology Select Sector SPDR ETF ( XLK - Free Report)
This most popular technology ETF follows the Technology Select Sector Index and has $12.4 billion in AUM. This fund trades in heavy volume of nearly 9.3 million shares and charges 14 bps in fees per year. In total, the fund holds about 75 securities in its basket. Of these firms, AAPL takes the top spot, making up roughly 14% of the assets. In terms of industrial exposure, the fund is widely spread across software, Internet software & services, hardware storage & peripherals, IT services, semiconductors, and diversified telecom services that make up for a double-digit allocation each. The ETF gained nearly 1.6% and 9.3% yesterday and the last three-month period, respectively.
Vanguard Information Technology ETF ( VGT - Free Report)
This fund manages about $9.6 billion in its asset base and provides exposure to a large basket of 377 technology stocks by tracking the MSCI US Investable Market Information Technology 25/50 Index. The ETF has 0.10% in expense ratio while volume is good at nearly 352,000 shares. Here again, AAPL is the top firm with 12.5% allocation. The product is well spread out across a number of sectors with Internet software & services, hardware & storage, system software, semiconductors, and data processing & outsourced services accounting for a double-digit allocation each. The ETF gained nearly 1.7% and 10.3% yesterday and the past three-month period, respectively.
iShares North American Tech ( IGM - Free Report)
This ETF tracks the S&P North American Technology Sector Index, giving investors exposure to 270 technology stocks. The fund has AUM of more than $922.8 million and charges 48 bps in fees and expenses. It has a volume of nearly 38,000 shares in hand a day. Apple occupies the top position in the basket with 9.1% of assets. Sector-wise, software and services holds the top position with 18.5% share while system software (13.5%) and semiconductors (12.5%) round-off the next two positions. The ETF gained nearly 1.6% and 9.6% yesterday and the last three-month period, respectively.
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