(AAPL) is scheduled to release earnings on July 30 after the market close. And even if you donâ€™t own the stock, you may just own the stock.
What do I mean? According to Bank of America Merrill Lynch strategist Mary Ann Bartels and team, it is the second-largest holding in U.S. exchange-traded funds to the tune of $57 billion invested in 241 ETFs. (
(MSFT), with $70 billion, is the largest U.S. ETF holding.)
Exposure within funds, however, can differ based on whether its market-cap or equal weightedâ€”Apple makes up 5% of cap-weighted large-cap funds on average, including 3.6% of the
SPDR S&P 500 ETF
(SPY), and just 1.8% of large-cap non-cap weighted ETFs. And even in tech funds, Appleâ€™s weight can vary: It makes up nearly 17% of the
Technology Select Sector SPDR ETF
(XLK) but just 0.2% of the
First Trust Large Cap Core AlphaDEX ETF
Whether thatâ€™s too much Apple or not enough depends on whether you think its recent concerns about waning iPhone demand and other issuesâ€”which, it should be said havenâ€™t kept its stock from gaining 32% in 2019â€”are real problems. The folks at Merrill Lynch donâ€™t. Their fundamental analyst rates the stock a Buy, while the firmâ€™s new Apple indicator suggests a positive sales inflection ahead. Even Stephen Suttmeier, Merrillâ€™s technical analyst, got into the act with a report talking about how the stockâ€™s â€œ2019 pattern is similar to the bullish setups for the stock after tests of the rising 200-week MA in 2013 and 2016…A decisive break above 210-215 is the catalyst to confirm upside potential to 243.â€
Still, there are plenty of analysts who see downside for Apple, particularly if its services business disappoints, including Rosenblatt Securities analyst Jun Zhang and Goldman Sachs analyst Rod Hall.
But that doesnâ€™t stop Bartels from recommending the Technology Select Sector SPDR ETF. â€œOur positive outlook for AAPL is an important factor in our evaluation of the Large Cap and Tech ETFs,â€ she writes. â€œOur Top Pick within the Tech ETF category is XLK due in large part to the Fundâ€™s mkt cap weight = which drives outsized exposure to stocks rated Buy by BofAML analysts (including AAPL).â€
Apple dipped 0.1% to $208.67 on Wednesday, while the
Dow Jones Industrial Average
fell 79.22 points, or 0.3%, 27,269.97, and the
rose 0.5% to 3019.56, a new record high.
Write to Ben Levisohn at Ben.Levisohn@barrons.com