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5 Top-Performing Stocks in Nasdaq ETF

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With a strong rebound in the stocks this year, the Nasdaq Composite Index is on the verge of ending its longest bear market since 1991. A closing at or above 7,431.50 for the index will mark a sharp rise of 20% from the Dec 24 low and an exit from the bear-market territory.

The rally was powered by a solid comeback of the technology sector, which was beaten down badly in fourth quarter last year. A slew of stronger-than-expected earnings results by major technology firms and signs of progress in U.S.-China trade deal renewed investors’ sentiment. Additionally, a rebound in oil price as well as Fed’s patience approach toward rate hike supported the gains (read: Sector ETFs & Stocks to Rally on US-Sino Trade Hopes).

Further, the sector’s long-term story remains intact with 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. The deployment of 5G (fifth-generation) technology — the next wireless revolution — is creating further opportunities. The wave of mergers and acquisitions is also providing further impetus to the space.

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 perform typically well in a maturing economic cycle.

Further, healthcare and consumer discretionary stocks are also providing a nice boost to Nasdaq. A defensive tilt in uncertain times has raised the appeal of healthcare stocks while a booming economy coupled with higher consumer spending is propelling discretionary stocks higher.

As a result, Invesco QQQ (QQQ - Free Report) , which serves as a proxy for the index, has climbed 10.9% so far this year. Let’s take a closer look at the fundamentals of QQQ (see: all the Large Cap Growth ETFs here).

QQQ in Focus

This ETF provides exposure to the 103 largest domestic and international non-financial companies listed on the Nasdaq by tracking the Nasdaq 100 Index. Information technology accounts for 42.5% of the assets, while communication services takes 22.9% share. QQQ is one of the largest and most popular ETFs in the large-cap space with AUM of $65.4 billion and average daily volume of around 52.6 million shares. It charges investors 20 bps in annual fees. The fund has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: Top ETF Stories of January).

Though most of the stocks in the fund’s portfolio have delivered strong returns so far this year, a few were the real stars, having gained at least 30%. Below we have highlighted the five best-performing stocks in the ETF with their respective positions in the fund’s basket:

Top-Performing Stocks in QQQ

Celgene Corporation : This global biopharmaceutical company is engaged in the discovery, development and commercialization of innovative therapies for the treatment of cancer and immune-inflammatory related diseases. This stock has risen nearly 39% so far this year and has just 0.82% exposure in the fund’s basket. It has seen positive earnings estimate revision of 35 cents over the past month for this year, with an expected earnings growth rate of 20.52%. The stock has a Zacks Rank #1 (Strong Buy) and VGM Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.

Xilinx Inc. (XLNX - Free Report) : This is a leading provider of All Programmable FPGAs, SoCs, MPSoCs and 3D ICs. The stock has climbed about 38.8% this year and has seen solid earnings estimate revision of 20 cents over the past month for this fiscal (ending March 2019) with an expected earnings growth rate of 23.32%. Xilinx has a Zacks Rank #1 and a VGM Score of D. The stock accounts for 0.4% of the fund.

Netflix Inc. (NFLX - Free Report) : This is the world's leading Internet television network with millions of subscribers in nearly 50 countries. Though the stock saw negative earnings estimate revision of couple of cents for this year over the past month, it is expected to generate substantial earnings growth of 50.37%. Netflix has surged 34.5% this year so far. It carries a Zacks Rank #3 (Hold) and has a VGM Score of F. The stock holds a 2% share in QQQ (read: Netflix Falls on Weak Guidance: ETFs to Watch).

Lam Research Corporation (LRCX - Free Report) : This company designs, manufactures, markets, refurbishes, and services semiconductor processing equipment used in the fabrication of integrated circuits worldwide. It saw negative earnings estimate revision of 45 cents over the past 30 days for this fiscal (ending June 2019), with expected earnings decline of 22.22%. The stock has a Zacks Rank #3 and a VGM Score of B. Lam Research make up for 0.37% allocation and has delivered robust returns of 31.6% this year so far.

Electronic Arts Inc. (EA - Free Report) : This is a leading global interactive entertainment software company. The stock has seen negative earnings estimate revision of 67 cents for this fiscal (ending March 2019) over the past month and has projected earnings decline of 3.94%. The stock has rallied about 30% this year so far and makes up for 0.4% of the fund portfolio. Currently, EA has a Zacks Rank #4 (Sell) and a VGM Score of D.

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