Amid the trade tensions between the United States and China, investors continued to pour money into fast-growing companies, pushing the Nasdaq Composite Index to new highs for the second consecutive day. The benchmark crossed the 8,000 milestone for the first time and is now up 16.1% this year so far.
Most of the surge was powered by big gains in large-capitalization technology and Internet stocks and is the latest sign that the longest bull market in Wall Street history remains healthy (read: 4 Sector ETFs That Crushed S&P 500 in Longest Bull Market).
The emergence of cutting-edge technology such as cloud computing, big data, Internet of Things, wearables, VR headsets, drones, virtual reality, artificial intelligence and machine learning as well as strong corporate earnings are acting as key catalysts. Additionally, the twin tailwinds of Trump’s tax reform plan and a rising interest rate scenario are pushing the stocks higher. Adding to the strength is a pickup in the economy and better job prospects that are giving a solid boost to economically sensitive growth sectors like technology, which typically perform well in a maturing economic cycle.
Further, healthcare and consumer discretionary stocks also provide nice boost to Nasdaq. A defensive tilt in the uncertain times raised the appeal of healthcare stocks while booming economy coupled with higher consumer spending drove discretionary stocks higher.
As a result, Invesco QQQ (QQQ - Free Report) , which serves as a proxy for the index, has climbed 18.8% so far this year. Let’s take a closer look at the fundamentals of QQQ.
QQQ in Focus
This ETF provides exposure to 103 largest domestic and international non-financial companies listed on the Nasdaq by tracking the Nasdaq 100 Index. Information technology accounts for 59.8% of the assets, while consumer discretionary takes 22.2% share. QQQ is one of the largest and most popular ETFs in the large-cap space with AUM of $70.9 billion and average daily volume of around 38.6 million shares. It charges investors 20 bps in annual fees. The fund has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read: Is There a Bubble in FAANG? Buy These Tech ETFs).
Though most of the stocks in the fund’s portfolio delivered strong returns so far this year, a few were the real stars, having gained more than 50%. Below we have highlighted five best-performing stocks in the ETF with their respective positions in the fund’s basket:
Top-Performing Tech Stocks in QQQ
Netflix Inc. (NFLX - Free Report) : This California-based company is the world's leading Internet television network. Though the stock saw negative earnings estimate revision of 19 cents for this year over the past three months, it is expected to generate substantial earnings growth of 114.40%. Netflix has surged 89.9% this year so far. It carries a Zacks Rank #3 (Hold) and has a VGM Score of F. The stock holds a 1.8% share in QQQ (read: ETFs in Focus on GICS Changes: Top Tech & FANG).
Align Technology Inc. (ALGN - Free Report) : This California-based is a global medical device company with industry-leading innovative products such as Invisalign clear aligners. The stock has climbed about 71.9% this year and saw solid earnings estimate revision of 23 cents over the past three months for this year with an expected earnings growth rate of 28.02%. Align Technology has a Zacks Rank #3 and a VGM Score of B. The stock accounts for 0.35% of the fund.
Amazon.com Inc (AMZN - Free Report) : This Washington-based company is engaged in the retail sale of consumer products and subscriptions in North America and internationally. It saw whopping earnings estimate revision of $4.83 over the past 90 days for this year, with expected earnings growth of 279.56%. The stock has a Zacks Rank #1 (Strong Buy) and a VGM Score of C. Amazon occupies the second position in the fund’s basket with 10.7% allocation and has delivered robust returns of 64.9% this year so far. You can see the complete list of today’s Zacks #1 Rank stocks here.
IDEXX Laboratories Inc. (IDXX - Free Report) : This Maine-based company is a leader in pet healthcare innovation, serving practicing veterinarians around the world with a broad range of diagnostic and information technology-based products and services. This stock has risen 60.7% so far this year and has just 0.25% exposure in the fund’s basket. It saw positive earnings estimate revision of a couple of cents over the past three months for this year, with an expected earnings growth rate of 27.74%. The stock has a Zacks Rank #3 and a VGM Score of A.
Illumina Inc. (ILMN - Free Report) : This California-based company provides sequencing and array-based solutions for genetic analysis. The stock has seen solid earnings estimate revision of 59 cents for this year over the past three months and has projected earnings growth of 36.50%. The stock has rallied about 58% this year so far and makes up for 0.58% of the fund portfolio. Currently, ILMN has a Zacks Rank #1 and a VGM Score of C (read: 5 Health Care ETFs Outperforming XLV on YTD Basis).
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