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Top-Performing Stocks of 2019 in Nasdaq ETF

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2019 has been a banner year for U.S. stocks with the Nasdaq Composite Index gaining about 34%. The rally was mainly driven by trade optimism and a dovish Fed.

In particular, the tech-laden Nasdaq Composite Index was powered by the soaring technology sector. The phase-one trade deal as well as solid data from China was a boon to tech stocks. This is because 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: 5 Solid Tech ETFs to Buy for Christmas).

The latest bouts of data including jobs, housing and industrial, also boosted investors’ confidence in the economy and the stock market. 

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

As a result, Invesco QQQ QQQ, which serves as a proxy for the index, has climbed 37.5% 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 47.3% of the assets, while communication services takes 21.4% share. QQQ is one of the largest and most popular ETFs in the large-cap space with AUM of $86.3 billion and average daily volume of around 25.9 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: 10 Most Heavily Traded ETFs of 2019).

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 50%. 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

Advanced Micro Devices Inc. AMD: This company provides microprocessors (x86-based), chipsets, discrete graphics processing units (GPUs) and professional graphics. The stock has risen nearly 132% this year and has just 0.5% exposure in the fund’s basket. It has witnessed no earnings estimate revision over the past month for this year, with an expected earnings growth rate of 34.8%. The stock has a Zacks Rank #3 (Hold) and a VGM Score of C.

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 no earnings estimate revision over the past 30 days for this fiscal (ending June 2020), with an expected earnings growth of 4.54%. The stock has a Zacks Rank #2 (Buy) and a VGM Score of D. Lam Research makes up for 0.4% allocation and has delivered robust returns of 115.4% this year so far. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

MercadoLibre Inc. MELI: This is one of the largest e-commerce platforms in Latin America. The stock has climbed about 99% this year and saw no earnings estimate revision over the past month for this year with an expected earnings decline rate of 271.95%. MercadoLibre has a Zacks Rank #5 (Strong Sell) and a VGM Score of D. The stock accounts for 0.3% of the fund.

KLA Corporation KLAC: This is an original equipment manufacturer (OEM) of process diagnostics and control (PDC) equipment and yield management solutions required for the fabrication of semiconductor integrated circuits (ICs) or chips. It has witnessed no earnings estimate revision over the past month for fiscal year (ending June 2020), with an expected earnings growth rate of 16.78%. KLA Corporation has surged 96% this year so far. It carries a Zacks Rank #2 and has a VGM Score of B. The stock holds a 0.3% share in QQQ (see: all the Large Cap Growth ETFs here).

ASML Holding N.V. ASML: This is a world leader in the manufacture of advanced technology systems for the semiconductor industry. The stock has seen negative earnings estimate revision of a penny for this year over the past month and has projected earnings decline of 4.74%. The stock has rallied more than 87% this year so far and makes up for 0.2% of the fund portfolio. Currently, ASML has a Zacks Rank #3 (Hold) and a VGM Score of F.

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