Five ETF Plays for Amazon's Tablet
Wednesday is D-Day in the tablet world as Amazon.com (Nasdaq: AMZN) is expected to unveil what some analysts are saying could be the first legitimate threat to iPad's tablet dominance.
Apple (Nasdaq: AAPL) has sold about 29 million iPads since the wildly popular device debuted in April 2010 and the tech juggernaut has maintained a stranglehold on the tablet space ever since. No one, not Hewlett-Packard (NYSE: HPQ), not Research In Motion (Nasdaq: RIMM), has been able to mount a serious threat to Apple on the tablet front.
This time could be different as Amazon is expected to price its tablet, which will reportedly be called the Kindle Fire, at $250, well below the cheapest version of the iPad. In the past, Amazon has shown a willingness to sacrifice profit margins for revenue growth, so it would not be a surprise to see that strategy repeated with the Kindle Fire.
We know this much: The tech world will be abuzz on Wednesday and these are the ETFs to play on roll-out of the Amazon tablet. Note: We looked beyond obvious plays such as the PowerShares QQQ (Nasdaq: QQQ) for this list.
First Trust ISE Cloud Computing Index Fund (Nasdaq: SKYY): Cloud computing and tablets don't always go together, but consider this: Amazon and Apple combine for over 8% of SKYY's weight. The Amazon tablet will run on the Android operating system. Google (Nasdaq: GOOG) is another top-10 holding in SKYY. Indeed, this is one ETF that will be in play thanks to Amazon's tablet.
First Trust Dow Jones Internet Index Fund (NYSE: FDN): Easy to explain. The First Trust Dow Jones Internet Index Fund allocates almost 19% of its weight to Google and Amazon. Those are the ETF's top two holdings.
iShares MSCI Taiwan Index Fund (NYSE: EWT): The iShares MSCI Taiwan Index Fund is a longer-term play on the tablet theme. News that Apple may be cutting iPad parts orders isn't the best news for EWT, an ETF where many components makers make a home. Then again, if the Kindle Fire is a success, some those parts makers should benefit. After a nasty spill not related to tablets at all, EWT found support just below $12, bounced from there and could rally another $1 before seeing next resistance.
Internet HOLDRs (AMEX: HHH): As is the case with many of the HOLDRs funds, HHH is heavily to just a few stocks. In this case, Amazon commands more than half of the ETFs weight. Amazon trades for almost $227 a share. HHH trades for just below $80, so the ETF is a more cost-efficient tablet play for a few days at least.
SPDR Morgan Stanley Technology ETF (NYSE: MTK): MTK has a tendency to fly under the radar, but it is a valid tablet play as Amazon and Apple combine for over 8% of the fund's weight. MTK would be a buy regardless of any tablet news on a move above resistance at $60.
