The technology sector has been flying high lately on receding trade fears and better-than-expected corporate earnings. Beijing and Washington are expected to strike a phase one trade deal anytime soon. Investors should note that the technology companies have huge exposure to China.
Additionally, the rapid emergence of cutting-edge technology, including cloud computing, big data, Internet of Things, wearables, VR headsets, drones, virtual reality, artificial intelligence and machine learning has been driving the sector. The growing adoption of 5G technology — the next wireless revolution — is creating further opportunities. The wave of mergers and acquisitions is also providing further impetus to the space (read: Why You Should Bet On Quality ETFs Now).
Further, global economic conditions have improved, leading to an increase in IT spending. Recession fear has dissipated, global composite PMIs (purchasing managers’ indices) have shown signs of stabilization, and central banks have resorted to easing policies across the globe. The combination is pushing the technology sector higher.
According to WSJ, technology stocks are heading toward their best year in a decade, prompting interest in high growth companies from memory chips to social-media platforms. The rally came amid the increased regulation and high valuation. Per CNBC, tech stocks are trading at their most expensive valuation since January 2005.
Further, technology has a solid Zacks Sector Rank in the top 32%, suggesting continued growth in the coming months (see: all the Technology ETFs here).
Given this, investors might want to tap the space with the best-performing technology ETFs and stocks of this year. For them, we have highlighted some of the top-ranked ones that could be excellent picks for investors seeking to benefit from the current trends:
SPDR S&P Semiconductor ETF (XSD - Free Report) – Up 53.6%
This fund provides equal-weight exposure to 35 chipmakers by tracking the S&P Semiconductor Select Industry Index. The fund has accumulated $407.3 million in AUM and charges 35 bps in fees per year. It trades in average daily volume of 111,000 shares and has a Zacks ETF Rank #2 (Buy) with a High risk outlook (read: 4 ETFs to Invest in Soaring Semiconductor Stocks).
VanEck Vectors Semiconductor ETF (SMH - Free Report) - Up 53.5%
This fund provides exposure to 25 semiconductor companies by tracking the MVIS US Listed Semiconductor 25 Index. It has managed assets worth $1.3 billion and charges 35 bps in annual fees and expenses. The ETF trades in average daily volume of 5.2 million shares and has a Zacks ETF Rank #2 with a High risk outlook.
Invesco DWA Technology Momentum ETF (PTF - Free Report) – Up 43.2%
This fund follows the Dorsey Wright Technology Technical Leaders Index and provides exposure to technology companies that are showing relative strength (momentum). Holding 39 stocks in the basket, it charges 74 bps in annual fees. The product is illiquid and relatively unpopular with AUM of $204.5 million and average daily volume of 56,000 shares. It has a Zacks ETF Rank #2 with a High risk outlook.
Technology Select Sector SPDR Fund (XLK - Free Report) – Up 43.1%
This is the most-popular technology ETF with AUM of $24.9 billion and average daily volume of $11.3 million shares. It charges 13 bps in fees per year from investors and tracks the Technology Select Sector Index, holding 68 stocks in its basket. The product has a Zacks Rank #1 (Strong Buy) with a High risk outlook (read: 4 Top-Ranked Cyclical Sector ETFs & Stocks for Q4).
Global X Internet of Things ETF (SNSR - Free Report) – Up 43%
This fund follows the Indxx Global Internet of Things Thematic Index and provides exposure to companies that stand to benefit from the broader adoption of IoT. Holding 40 stocks, it has accumulated $116.4 million in AUM and sees average daily volume of around 30,000 shares. Expense ratio comes in at 0.68%.
TechTarget Inc. (TTGT - Free Report) – Up 136.5%
This leading online information technology media player provides IT companies with ROI-focused marketing programs to generate leads, shorten sales cycles and drive revenues. The stock has witnessed solid earnings estimate revision of 4 cents over the past 90 days for this year and has an estimated earnings growth rate of 45.6%. It has a Zacks Rank #2 and VGM Score of B (see: all the Technology ETFs here).
Vipshop Holdings Limited (VIPS - Free Report) – Up 123.1%
This online discount retailer offers branded products to consumers in China through flash sales on its vipshop.com website. The stock has seen solid earnings estimate revision of 15 cents over the past 90 days for this year and has an estimated earnings growth rate of 67.2%. It has a Zacks Rank #2 and VGM Score of A.
Cirrus Logic Inc. (CRUS - Free Report) – Up 109.7%
This is a fabless semiconductor supplier, which develops, manufactures and markets analog, mixed-signal, and audio DSP integrated circuits. The stock has seen solid earnings estimate revision of 60 cents over the past 90 days for fiscal year (ending March 2020) and has an estimated earnings growth rate of 28.4%. It has a Zacks Rank #1 and VGM Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.
Sapiens International Corporation N.V. (SPNS - Free Report) – Up 100.4%
It provides software solutions for the insurance and financial services industries in North America, Europe, the Asia Pacific, and South Africa. The stock has seen positive earnings estimate revision of 3 cents over the past 90 days for this year and has an estimated earnings growth rate of 37.5%. It has a Zacks Rank #2 and VGM Score of B.
PC-Tel Inc. (PCTI - Free Report) – Up 99.3%
This company designs, develops and delivers wireless solutions. The stock saw positive earnings estimate revision of 3 cents over the past 90 days for this year and has an estimated earnings growth rate of 1200%. It has a Zacks Rank #2 and VGM Score of A.
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