Apple (NASDAQ:AAPL) continued its run of spectacular quarterly performance. After the closing bell on Apr 27, it reported a huge beat on both the top and the bottom lines for second-quarter fiscal 2015. Robust iPhone and Mac sales as well as record performance by the App Store made last quarter the best ever. The technology giant also promised to return more capital to shareholders.
Apple Results in Focus
Earnings per share came in at $2.33, which comfortably surpassed the Zacks Consensus Estimate of $2.19 and improved from the year-ago earnings of $1.66. Apple has now surpassed earnings expectations for seven quarters in a row. Revenues climbed 27% year over year to $58 billion and were well ahead of our estimate of $57.46 billion.
Gross margin was 40.8%, up from 39.3% in the year-ago quarter and ahead of the company's own guidance of 38.5-39.5%.
Sales of iPhone surged 40% year over year to 61.2 million and easily crushed the Wall Street forecast of 58 million. This represents the second highest iPhone sales in the company's history. China led the way higher in selling iPhones last quarter and outpaced the U.S. for the first time, buoyed by the appeal for the larger-screen smartphones and the New Year gift-giving holiday. With this, China has become the second largest iPhone market after U.S., outpacing Europe. Overall, sales in China soared 71% year over year to $16.8 billion (read: China ETFs: Bull or Bear in the Year of the Goat?).
Meanwhile, sales for Mac desktop computers grew 10.3% year over year to 4.563 million. However, iPad sales continued to disappoint for the fifth consecutive quarter, falling 22.8% to 12.623 million.
The ubiquitous gadget-maker foresees revenues in the range of $46-$48 billion for the current quarter; the midpoint is slightly lower than the Zacks Consensus Estimate of $47.087 billion. Further, Apple expects gross margin in the range of 38.5-39.5% for the third quarter of fiscal 2015.
The iPhone maker boosted its dividend by 11% year over year to 52 cents per share and raised its share buyback program from $90 billion to $140 billion. This will result in $200 billion in shareholder rewards by the end of March 2017. With this, the company is expected to regain its top dividend payer status, pushing the oil giant Exxon Mobil (NYSE:XOM) back to the second spot.
Further, earlier this month, Apple launched its Watch, which is currently available in 9 countries, namely Australia, Canada, China, France, Germany, Hong Kong, Japan, the UK and the U.S. Demand for this wearable device is high, and the company is looking to increase its existing supply as well as roll out Watch in additional countries by the end of this quarter.
Shares of AAPL were modestly up about 1.2% in after-market hours and are expected to move higher in the coming days. Apple currently has a Zacks Rank #2 (Buy), suggesting that the stock's outperformance will continue (read: 3 Stocks Driving the Nasdaq 100 ETF to New Highs).
ETFs to Buy
Given this, several ETFs having the largest allocation to this tech titan are poised to outperform in the coming days, and investors shouldn't miss the opportunity arising from any surge in the stock price. For those interested, we have highlighted three ETFs having double-digit exposure to Apple and could be great plays to tap into the same trend with low risk:
iShares U.S. Technology ETF (NYSEARCA:IYW)
This ETF tracks the Dow Jones U.S. Technology Index, giving investors exposure to the broad technology space. The fund holds 141 stocks in its basket with AUM of $2.9 billion while charging 43 bps in fees and expenses. Volume is solid, as it exchanges nearly 584,000 shares in hand a day.
Apple occupies the top position in the basket with 20.7% of assets. About 48% of the portfolio is allocated to software and services while technology hardware and equipment accounts for 36% share. The fund has added nearly 4.8% in the year-to-date time frame and has a Zacks ETF Rank of 1 or "Strong Buy" rating with a Medium risk outlook (read: Bet on These Top Ranked Tech ETFs for Outperformance).
Technology Select Sector SPDR ETF (NYSEARCA:XLK)
The most popular technology ETF XLK follows the S&P Technology Select Sector Index and has $12.9 billion in AUM. This fund trades in heavy volume of roughly 8 million shares and charges 15 bps in fees per year from investors. In total, the fund holds about 74 securities in its basket. Of these firms, AAPL takes the top spot, making up roughly 18.4% of the assets.
In terms of industrial exposure, the fund is widely spread across hardware storage & peripherals, software, IT services, Internet software & services and diversified telecom services that make up for double-digit allocation. The fund has returned 4.7% in the year-to-date time period. It has a Zacks ETF Rank of 2 or "Buy" rating with a Medium risk outlook.
Vanguard Information Technology ETF (NYSEARCA:VGT)
This fund manages about $7.5 billion in its asset base and provides exposure to a large basket of 388 technology stocks by tracking the MSCI U.S. Investable Market Information Technology 25/50 Index. The ETF has 0.12% in expense ratio while volume is moderate at nearly 394,000 shares.
Here again, AAPL is the top firm with 16.8% allocation. The product is well spread out across a number of sectors with hardware & storage, software & services, system software, semiconductors, and data processing & outsourced services each accounting for double-digit allocation. VGT is up 5.3% so far this year and has a Zacks ETF Rank of 1 with a Medium risk outlook.