The largest company in the world, Apple Inc. (NASDAQ:AAPL) will announce fiscal second-quarter results this afternoon, and you can bet your bottom dollar the Street will be waiting with bated breath for the Apple earnings numbers.
With financial stocks, healthcare stocks, and even several big-name tech giants like Google Inc (NASDAQ:GOOG, NASDAQ:GOOGL) and Microsoft Corporation (NASDAQ:MSFT) already blowing the roof off expectations, Apple earnings might be the single-biggest gauge yet of how this earnings season will be received.
As the most highly valued company on the globe, AAPL results won’t just tell us something about consumer spending and consumer confidence. They’ll tell us whether a number of exchange-traded funds, or ETFs, should expect their share prices to roar higher or shoot lower.
Below are five large ETFs, each of which has a high degree of exposure to the daily fluctuations of the AAPL stock price. In the following table you’ll see four columns, which, from left to right, display a fund’s: a) Name and ticker, b) expense ratio and c) percentage weighting in AAPL stock.
|iShares Dow Jones US Technology (ETF) (NYSEARCA:IYW)||0.43%||20.8%|
|Technology SPDR (ETF) (NYSEARCA:XLK)||0.15%||18.1%|
|Vanguard Information Technology ETF (NYSEARCA:VGT)||0.12%||16.8%|
|Fidelity MSCI Information Technology Index ETF (NYSEARCA:FTEC)||0.12%||17%|
|iShares S&P Global Technology Sect.(ETF) (NYSEARCA:IXN)||0.47%||15.7%|
All of the above funds have between 15% and 21% of their holdings in Apple stock, so they’ll likely be very volatile in the aftermath of Apple earnings.
To get some idea for how high these concentrations are, consider the fact that many mutual funds won’t allow for a single stock to account for more than 5% of the entire portfolio. These ETFs are all but betting the farm on AAPL stock.
So, if you’re an investor in one of these ETFs, you’ll probably want to know just what people expect from Apple earnings this quarter.
InvestorPlace Contributor James Brumley told us what Wall Street expects in his recent piece, “What You Need to Know Before Apple Earnings (AAPL)”:
“As of the most recent numbers, Apple is expected to have earned $2.14 per share on $55.7 billion in revenue for the quarter that ended in March. Both numbers are better than the year-ago bottom line of $1.66 per share of AAPL stock and top line of $45.6 billion. Moreover, the company itself offered Q2 revenue guidance of between $52 billion and $55 billion when it unveiled its Q1 results.”
As Brumley notes later in his Apple earnings preview, we’ve grown accustomed to seeing AAPL trump consensus estimates, with the company’s last earnings miss coming in the fourth fiscal quarter of 2012.
iPhone 6 sales in China should be a big determinant of how well AAPL — and these five Apple-heavy ETFs — perform this quarter.
As of this writing, John Divine was long AAPL stock, GOOG stock and GOOGL stock. You can follow him on Twitter at @divinebizkid or email him at email@example.com.