Amazon ETFs To Buy On Q4 Blockbuster Results

After the closing bell on Thursday, online e-commerce behemoth Amazon (NASDAQ:AMZN) came up with blockbuster Q4 results with a huge earnings beat of 16.76% powered by big sales associated with its Alexa voice assistant and strong profits at Amazon Web Services. In fact, Amazon’s quarterly profit soared past $1 billion for the first time in its more than 20-year history.

Q4 Results in Detail

The company reported earnings per share of $2.16, trumping the Zacks Consensus Estimate of $1.85 and improving from the year-ago earnings of $1.54. Revenues climbed 38% year over year to $60.5 billion and topped the estimate of $59.99 billion. This represents the strongest holiday quarter sales growth in eight years driven by a surge in online shopping and strong demand for its fast-growing cloud computing business (read: Holiday Sales At 6-Year High: Best Consumer ETFs & Stocks).

The online retailer drew millions of new customers to its fast-shipping and video-streaming service, Amazon Prime, in the holiday season. More than four million people started free Prime trials or opted for paid memberships in one week alone. Meanwhile, revenues from the cloud computing business — Amazon Web Services (AWS) — surged 44.6% year over year to $5.1 billion.

For the first quarter of 2018, the company expects revenues to grow 34-42% to $47.75-$50.75 billion. The midpoint is above the Zacks Consensus Estimate of $48.95 billion, which represents 37% growth. Operating income is expected in the range of $300 million to $1 billion.

Amazon currently has a Zacks Rank #3 (Hold) and belongs to a top-ranked Zacks industry (top 43%). Further, it has a top Growth and Momentum Style Score of A and B, respectively, suggesting that the stock is primed for future growth.

Market Impact

Another quarter of blockbuster results pushed shares of AMZN higher as much as 6.8% in aftermarket hours to new record highs that will help Amazon to become a $700-billion company.Solid trading in the stock will definitely continue in the ETF world, especially for funds with a double-digit allocation to this Internet giant.

Below we have highlighted some of these that would be in focus in the coming days and could see upside post AMZN results. These funds have a solid Zacks ETF Rank #1 (Strong Buy), #2 (Buy) or #3, suggesting continued upside (read: all the Consumer Discretionary ETFs here):

VanEck Vectors Retail ETF (V:RTH)

This fund provides exposure to the 26 largest retail firms by tracking the MVIS US Listed Retail 25 Index. Of these, AMZN takes the top position in the basket with 19.6% share. The ETF has a certain tilt toward specialty retail, which accounts for 31% of the portfolio with 31%, while Internet direct marketing (25%), hypermarkets (11%), and departmental stores (10%) round off the next three spots. The product has amassed $78.8 million in its asset base and charges 35 bps in annual fees. Volume is light as it exchanges nearly 12,000 shares per day. RTH has a Zacks ETF Rank #3 with a Medium risk outlook.

Consumer Discretionary Select Sector SPDR Fund XLY

This product offers exposure to the broad consumer discretionary space by tracking the Consumer Discretionary Select Sector Index. It is the largest and the most popular product in this space with AUM of nearly $13.6 billion and average daily volume of around 4.3 million shares. Holding 84 securities in its basket, Amazon takes the top spot with 18.8% of assets. Internet & direct marketing retail dominates more than one-fourth of the portfolio while media, specialty retail, and hotels restaurants and leisure round off the next three spots with a double-digit allocation each. The fund charges 0.13% in expense ratio and has a Zacks ETF Rank #3 with a Medium risk outlook (read: Sector ETF & Stock Winners 10-Years Since Great Recession).

iShares U.S. Consumer Services ETF IYC

This ETF provides targeted exposure to domestic consumer services’ stocks by tracking the Dow Jones U.S. Consumer Services Index. It holds 168 stocks in its basket with Amazon being the top firm holding 15.65% share. In terms of industrial exposure, retailing makes up the largest share with 42.7%, followed by media (20.8%), consumer services (16%), and foods & staples retailing (12.6%). The fund has amassed $862.7 million in its asset base while trades in lower volumes of 27,000 shares a day on average. It charges 44 bps in annual fees from investors and has a Zacks ETF Rank #2 with a Medium risk outlook.

Fidelity MSCI Consumer Discretionary Index ETF FDIS

This fund tracks the MSCI USA IMI (LON:IMI) Consumer Discretionary Index, holding 346 stocks in its basket. Of these, AMZN takes the top spot with 15.5% share. Internet & direct marketing retail makes up for the top sector with 22.6% share followed by media (21.1%), specialty retail (17.2%) and hotels restaurants & leisure (15.4%). The product has amassed $478.1 million in its asset base while trades in a moderate volume of around 80,000 shares a day on average. It charges 8 bps in annual fees from investors and has a Zacks ETF Rank #3 with a Medium risk outlook (read: Consumer ETFs to Perk Up in 2018 on Wage Hikes?).

iShares Edge MSCI Multifactor Consumer Discretionary ETF (BO:CNDF)

This ETF has attracted $3.4 million in its asset base and trades in a meager volume of under 500 shares. It targets companies that have the potential to outperform the broad U.S. consumer discretionary sector and tracks the MSCI USA Consumer Discretionary Diversified Multiple-Factor Capped Index. Holding 44 stocks in its basket, Amazon is the top firm accounting for 15.5% of the portfolio. The fund is skewed toward retailing at 39.4% while consumer durables, consumer services and media round off the next three spots with a double-digit exposure each. CNDF charges 35 bps in fees per year and has a Zacks ETF Rank #2.

Vanguard Consumer Discretionary ETF (HN:VCR)

This fund follows the MSCI U.S. Investable Market Consumer Discretionary 25/50 Index and holds 374 stocks in its basket. Of these, Amazon occupies the top position with 13.7% allocation. Internet & direct marketing retail, cable & satellite, movies & entertainment and restaurants are the top four sectors. VCR charges investors 10 bps in annual fees while volume is moderate at nearly 66,000 shares a day. The product has managed about $2.7 billion in its asset base and has a Zacks ETF Rank #3 with a Medium risk outlook.

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Amazon.com, Inc. (AMZN): Free Stock Analysis Report

VANECK-RETAIL (RTH): ETF Research Reports

SPDR-CONS DISCR (XLY): ETF Research Reports

VIPERS-CONS DIS (VCR): ETF Research Reports

ISHRS-EMS MCD (CNDF): ETF Research Reports

FID-CON DIS (FDIS): ETF Research Reports

ISHARS-US CN CY (IYC): ETF Research Reports

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