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3 Sector ETFs To Play Ahead Of Alphabet, Disney Earnings

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3 Sector ETFs To Play Ahead Of Alphabet, Disney Earnings

Earnings season continues moving along and there are some marquee reports to mull over this week. The big names include Google parent Alphabet Inc (NASDAQ: GOOGL)(NASDAQ: GOOG) reporting after Monday's close and Dow component Walt Disney Co (NYSE: DIS) continuing the earnings parade Tuesday afternoon.

"Our analysts maintain their positions on these two companies' lasting competitive advantages. Google is the leader in online advertising and is also gaining ground in the cloud market," said Morningstar. "It has strong network effects from its diverse line of products such as search, Android, Maps, Gmail, YouTube, and more. On Disney, we believe that it is successfully transforming its business to deal with the ongoing evolution of the media industry. ESPN remains the crown jewel of Disney's media networks segment."

Both companies are members of the communication services sector, the fourth-largest sector exposure in the S&P 500. Following Facebook's (NASDAQ: FB) post-earnings slide last week, the sector could use a lift and Alphabet and Disney could be just the names to deliver that boost.

With Alphabet and Disney both considered bellwethers, here are some exchange traded funds with notable exposure to the stocks to consider over the next few days.

See Also: 4 Sector ETFs To Mull Over In February

Communication Services Select Sector SPDR (XLC)

The Communication Services Select Sector SPDR (NYSE: XLC) is the largest exchange traded fund dedicated to this sector and is coming off a 3.2% loss last week, one largely induced by Facebook's tumble. Those are the breaks when an ETF holds a massive Facebook stake, as is the case with XLC.

The two share classes of Alphabet stock, the “A” and “C,” combine for about 23.80% of XLC's weight, so alone that earnings report could right the ship for XLC. Disney is somewhat important here as well as it's XLC's 10th-largest holding at a weight of just over 4%.

John Hancock Multifactor Media and Communications ETF (JHCS)

The John Hancock Multifactor Media and Communications ETF (NYSE: JHCS) is an alternative to cap-weighted communication services ETFs like XLC. It's a smart beta fund that emphasizes factors such as smaller size, lower relative prices and higher profitability in constructing its portfolio.

While JHCS isn't a cap-weighted fund, its 10 holdings are dominated by the likes of Facebook, Disney and Alphabet. In fact, the ETF's 5.56% weight to Disney is among the largest to that stock among ETFs. Combined, Alphabet and Disney represent about 12.55% of this fund's weight.

Fidelity MSCI Telecommunication Services ETF (FCOM)

The Fidelity MSCI Telecommunication Services ETF (NYSE: FCOM) is similar to the aforementioned XLC, but there are some important differences. For short-term traders, XLC is the preferred option due to better volume, tighter spreads and a more robust options chain. For long-term investors, the Fidelity product is perhaps the better option because its expense ratio of 0.0840% is below XLC's 0.13%.

Like its SPDR rival, FCOM features substantial Alphabet and Disney exposure as those companies combine for about 27.41% of this ETF's roster.

 

Related Articles (XLC + FCOM)

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