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6 Top-Ranked ETFs With Apple in Basket for Juicy Returns

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Apple (AAPL - Free Report) is currently the hottest stock on Wall Street as its shares are gaining at the fastest pace in over nine years. This is especially true, as the stock scaled multiple highs, surpassing $185 for the first time on May 7. The technology giant has been on the longest six-day winning streak since Mar 17, 2009, gaining 14.1% and is heading closer to a record trillion-dollar market capitalization.

The massive upside came on the back of strong second-quarter fiscal 2018 results, which eased concerns about weak demand for iPhone and the bullishness shown by the Oracle of Omaha (see: all the Technology ETFs here).

Glance at Q2 Earnings

Earnings per share came in at $2.73, beating the Zacks Consensus Estimate by 4 cents and improving 30% from the year-ago quarter. Revenues grew 16% year over year, the fastest growth in more than two years, to $61.1 billion and edged past the estimate of $61 billion. Apple sold 52.2 million iPhones in the fiscal second quarter, up from 50.8 million units in the year-ago quarter but below the consensus estimate of 52.94 million units (read: ETFs to Buy Post Apple's Strong Q2 Result).

The gadget maker foresees revenues in the range of $51.5-$53.5 billion for the third quarter of fiscal 2018. The company also encouraged investors with a big dividend boost and stock buybacks, following the tax break that will bring overseas cash back to the United States. It announced a massive share buyback program to the tune of $100 million on top of the existing $210 billion to be completed during the fiscal third quarter, and boosted its quarterly dividend by 16% to 73 cents.

Buffett’s Confidence

Warren Buffett’s Berkshire Hathaway disclosed late last week that it had purchased an additional 75 million shares in the iPhone maker in the first quarter, raising its stake to $44 billion or 5%. Then he doubled down his bullish comments on May 7 by saying that he likes Apple stock so much he would love to own all of it.  

"I clearly like Apple. We buy them to hold," Buffett said on CNBC's Squawk Box. "We bought about 5% of the company. I'd love to own 100% of it. ... We like very much the economics of their activities. We like very much the management and the way they think."

Buffett also supported Apple's plan to buy back more of its own shares (read: Profit From Share Buyback Boom With These ETFs).

Solid Fundamentals

Earnings estimates rose from $11.21 to $11.43 per share for the fiscal year (ending September 2018) over the past seven days following its quarterly results. This represents substantial growth of 24.10% compared with the industry average of 17.17%. Revenues are expected to grow 13.52%, higher than the industry average growth of 8.88%.   

The stock is currently trading at a PEG ratio of 1.37, much lower than the industry average of 1.63, suggesting that it is a better value stock in the industry. The lower the PEG ratio, the better the value as investors would be paying less for each unit of earnings growth. According to the analysts polled by Zacks, Apple has an average target price of $195.17 with nearly 52% having a Strong Buy or a Buy rating, representing a 5.4% upside to the current price.

Apple currently has a Zacks Rank #3 (Hold) and belongs to a top-ranked Zacks industry (top 44%), suggesting significant upside for the stock over the coming days. Further, the stock has a solid Value and Momentum Score of B and A, respectively. With the latest surge, Apple has rallied nearly 9.4% in the year-to-date timeframe, crushing the Zacks Industry Computer-Mini Market by a thin margin (read: 6 Large Cap Value ETFs to Buy in a Shaky Market).

ETFs to Buy

Given the bullish fundamentals, investors seeking to tap this tech titan could consider the following ETFs. These funds have Apple as their top firm with a double-digit allocation and a solid Zacks ETF Rank # 2 (Buy).

iShares Dow Jones US Technology ETF IYW: Apple exposure – 17.3%

Select Sector SPDR Technology ETF XLK: Apple exposure – 15%

MSCI Information Technology Index ETF FTEC: Apple exposure – 14%

iShares Edge MSCI Multifactor Technology ETF TCHF: Apple exposure – 13.8%

PowerShares QQQ QQQ: Apple exposure – 12.1%

iShares Edge MSCI USA Value Factor ETF VLUE: Apple exposure – 10.7%

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