2 ETFs to Take Advantage of Amazon’s Growth Before the Stock Split

Promotions on Monday 6 June Amazon.com (NASDAQ πŸ™‚ will begin trading after the 20 for 1 split. The stock price is up more than 12% since May 25, when shareholders voted in favor of the split.

Wall Street pays particular attention to stock split announcements, which can act as a catalyst for rising stock prices. For example, research shows that between 2010 and 2020, 240 stock splits achieved an average six-month return of 5.25%, compared to 4.39%.

Amazon shares reached a record high of $3,773.08 in July 2021. However, on May 24, they hit the 52-week low of $2,025.24, losing more than 45% of their value in less than a year. So far, in 2022, the AMZN share has fallen by more than 27%. In comparison, the index has fallen by 23.1% since January.

Still, 56 analysts surveyed by Investing.com rated AMZN stocks as “above the market.”

Amazon Consensus Estimates

Amazon Consensus Estimates

Source: Investing.com

In addition, the average fair value of Amazon stock on InvestingPro under various valuation models, including P/E, P/S, or terminal values, is $3,109.33, an increase of 27.8% from current levels. Understandably, this price on June 6 also reflects the split.

Amazon's Fair Value Estimation

Amazon’s Fair Value Estimation

Source: InvestingPro

With this information in mind, we present two exchange-traded funds (ETFs) that have AMZN stocks in their portfolio. These funds may be attractive to Amazon bulls who also want to diversify their holdings.

1. Vanguard Consumer Discretionary Index Fund ETF Shares

  • Current price: $254.09
  • 52 weeks range: $226.28 – $360.54
  • Dividend percentage: 1.20%
  • Cost Factor: 0.10% year

The first fund on today’s list is Vanguard Consumer Discretionary Index Fund ETF Shares (NYSE πŸ™‚ ; invests in companies that offer goods or services that consumers do not necessarily need, but which they purchase at their discretion. The fund made its stock exchange debut in January 2004.

Weekly VCR

The VCR, which tracks the MSCI US Investable Market Consumer Discretionary Index, currently has 303 stocks. In terms of sector allocations, we note the internet and retail direct marketing (21.6%); car manufacturers (17.8%); DIY / DIY stores (9.5%); hotels, resorts and cruises (7.1%); general goods stores (4.4%); retail clothing (3.5%) and others.

The top 10 stocks account for more than 58% of the $6 billion in net assets. Among them, the Amazon dominates with 19.2%; The next: Tesla (NASDAQ :); DIY store (NYSE πŸ™‚ ; McDonald’s (NYSE :), Nike (NYSE πŸ™‚ en Lowe’s Companies (NYSE :).

The VCR hit a record high in November 2021, but the fund is down 25.4% since the start of the year. The final price/earnings ratio (P/E) and price/book value (P/B) are 21.7x and 5.1x, respectively. Further to $250 or even below would be a better entry point for this fund.

2. ProShares Online Retail ETF

  • Current price: $34.17
  • 52 weeks range: $29.84 – $86.23
  • Cost Factor: 0.58% years.

In 2021, Amazon accounted for nearly 9.5% of all retail spending in the United States. Walmart (NYSE:) was next with a share of 8.6%. And if we look at US eCommerce stats, Amazon has a clear dominance, over 55%. Investors are therefore optimistic about the future of retail e-commerce funds investing in this e-commerce giant.

Another fund on our list – ProShares Online Retail ETF (NYSE πŸ™‚ invests in global retailers that primarily sell online or through other channels outside of brick-and-mortar stores. The fund was launched in July 2018 and has net assets of $87.6 million.

ONLN Weekly Chart

ONLN, which tracks the ProShares Online Retail Index, owns 38 stocks. More than three quarters of the companies are located in the United States; then we have stocks from China, Taiwan, Brazil, Mexico, South Korea, UK and Israel.

More than 60% of the fund was invested in the top 10 stocks. Readers may be interested to learn that Amazon is again the leading share (26.11%) on the list, followed by Chinese heavyweight companies such as Alibaba (NYSE πŸ™‚ and JD.com (NASDAQ :)); eBay (NASDAQ :); online store featuring medical apparel and lifestyle brand Figs (NYSE:); Chewy (NYSE:) a popular e-commerce brand focused on pet food and products.

The ONLN recorded a record high in July 2021 due to favorable winds in the pandemic months. However, since January, this ETF has lost nearly 40% of its value. It is also down 53.9% in the past 52 weeks.

The final P/E and P/B ratios are 42.425x and 7.42x, respectively. Investors whose portfolios can handle short-term volatility should consider buying an ONLN in the pit.


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