In what has been a trying year for the S&P 500 and other major U.S. equity benchmarks, only a few story stocks are still standing tall. Take the case of Amazon (AMZN), which is up a whopping 70% year-to-date.
But AMZN isn’t only in that extraordinary growth. Netflix (NFLX) stock is another gem to behold, as despite a loss of more than 20% over the past month, NFLX has nearly doubled this year.
The other side of runs like those is that investors who missed out on the upside begin wondering if they’re too late, particularly with Amazon stock up 268% over the past five years and Netflix stock up a life-changing 355%. The good news is, if recent actions taken by Amazon and Netflix prove to be accurate harbingers, these stocks are not close to slowing down.
Netflix stock could have plenty of near-term upside as the company continues expanding into international markets and bolstering its original content offerings (the company’s first original movie, Beasts of No Nation, could be an Oscar contender.) And Some analysts see competitive threats to the company as overblown, and at least one sell-side analyst recently put a $160 price target on the shares, implying upside of more than 60% from current levels for Netflix stock.
Amazon stock has its own set of bullish catalysts, which also includes the company’s efforts to bolster offerings of original media content. Last week, RBC Capital raised its price target on Amazon stock to $705 from $660. Even the $660 price target implies massive upside for Amazon stock, which closed just over $529 last Friday.
Investors looking to access either Amazon stock or Netflix stock via exchange-traded funds have ample options, but those looking to find both stocks under the umbrella of one ETF should focus on the following funds.
Tune Into Amazon and Netflix Stock: First Trust ISE Cloud Computing Index Fund (SKYY)
AMZN Weighting: 4.8%
NFLX Weighting: 4.1%
Cloud computing might not be the first thing investors think of when they think of Amazon or Netflix, and this ETF is one of just over 70 that holds shares of Amazon, and one of almost 65 ETFs that owns Netflix stock. But the First Trust ISE Cloud Computing Index Fund (SKYY) features both Amazon and Netflix stock among its top 10 holdings.
Amazon stock is SKYY’s largest holding at a weight of 4.8%, while Netflix is the ETF’s sixth-largest holding with a 4% allocation. SKYY’s underlying index allows for some cloud flexibility, which allows for the inclusion of firms like Amazon and Netflix because the index makes room for “companies that focus outside the cloud computing space but provide goods and services in support of the cloud computing space,” according to First Trust.
The $471.5 million ETF charges 0.6% per year, or $60 per $10,000 invested.
Tune Into Amazon and Netflix Stock: First Trust Dow Jones Internet Index Fund (FDN)
AMZN Weighting: 11.2%
NFLX Weighting: 4.5%
Staying in the First Trust family, the First Trust Dow Jones Internet Index Fund (FDN), the largest dedicated Internet ETF, features one of the largest weights to Amazon stock of any ETF, with an allocation of almost 11.2% to the e-commerce giant. That makes Amazon FDN’s largest holding by more than 70 basis points over second-place Facebook (FB).
Netflix stock is also a top 10 holding in FDN, chiming in at a weight of 4.5%, making Netflix the ETF’s sixth-largest holding. For the investor who likes ratings and rankings, FDN shows well as it has a five-star rating from Morningstar. Home to 42 stocks, the $3.4 billion FDN charges 0.54% a year, or $54 per $10,000 invested.
Tune Into Amazon and Netflix Stock: SPDR Morgan Stanley Technology ETF (MTK)
AMZN Weighting: 4.9%
NFLX Weighting: 5.7%
Here’s an interesting reminder to consider when perusing ETFs as avenues to Amazon stock or Netflix: Many of the traditional technology ETFs will not hold shares of these companies for a simple reason. The reason being is that index providers classify Amazon and Netflix as consumer discretionary companies. In other words, don’t run to the Technology Select Sector SPDR (XLK) hoping to find Amazon stock or shares of Netflix.
The SPDR Morgan Stanley Technology ETF (MTK) breaks with that oppressive indexing strategy. In fact, MTK is one of a small number of ETFs where Netflix stock is the largest holding. In this case, Netflix stock is 5.7% of MTK’s weight. Amazon stock is in MTK’s second spot with a weight of almost 4.9%.
Overall, MTK offers exposure to eight technology and Internet sub-industry groups, a broad swath compared to traditional tech ETFs. Although plenty of old guard tech names are found among MTK’s 38 holdings, the ETF is tilted more heavily toward the likes of Netflix, Amazon, Facebook and related fare.
The $417 million MTK charges 0.35% per year, or $35 for every $10,000 invested.
As of this writing, Todd Shriber did not hold a position in any of the aforementioned securities.
