Is QQQ Stock A Buy Right Now? Here’s What Earnings, Charts Show
Looking for a high-growth stock with huge potential — especially as technology stocks get pounded? Apple stock or Microsoft? Amazon.com or Facebook? Why choose? Own them all. X...
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Looking for a high-growth stock with huge potential — especially as technology stocks get pounded? Apple stock or Microsoft? Amazon.com or Facebook? Why choose? Own them all.
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QQQ stock, or the Invesco QQQ Trust (QQQ), puts the 100 most-important Nasdaq stocks into your portfolio in one trade. Best of all, it leaves out financials, focusing your portfolio on companies in faster-growing sectors. The QQQ a low cost way to own the companies building the future economy.
And rather than trying to pick the right tech stock to buy and when to buy it, place one trade and you own them all right now.
All this at a rock-bottom fee of just 0.2% a year. Following a commission war launched in 2019 by Charles Schwab (SCHW), Interactive Brokers (IBKR) and TD Ameritrade (AMTD), you can buy this fund for no commission. That means you pay just $20 a year for every $10,000 invested.
How do you get on board?
QQQ stock is the fifth most-popular exchange-traded fund in the world, holding more than $150 billion in investors’ assets. It tracks the Nasdaq-100 index, which owns the most valuable nonfinancial stocks on the Nasdaq. QQQ is also the largest ETF that tracks a narrower slice of the stock market. The largest ETF is the broad SPY stock, which owns all the stocks in the S&P 500.
But while the QQQ stock isn’t a broad market ETF, it owns the most valuable stocks trading on the Nasdaq. That definition means the QQQ is very tech heavy. Most of the world’s biggest technology stocks still trade on the Nasdaq. And given that technology continues to be the top-performing sector, giants like Microsoft (MSFT) and Apple (AAPL) plus tech-adjacent Amazon.com (AMZN) only get more important in the ETF.
QQQ stock is heavily tilted to megacap tech stocks. All of its top 10 holdings are technology or tech-related companies like Amazon.com.
Company | Symbol | Weight in QQQ Stock |
---|---|---|
Apple | (AAPL) | 12.5% |
Microsoft | (MSFT) | 10.8% |
Alphabet | (GOOG) | 7.7% |
Amazon | (AMZN) | 6.4% |
Tesla | (TSLA) | 4.1% |
Nvidia | (NVDA) | 3.2% |
Meta Platforms | (META) | 3.0% |
PepsiCo | (PEP) | 2.1% |
Costco Wholesale | (COST) | 2.0% |
Broadcom | (BRCM) | 1.9% |
The Nasdaq 100 isn’t as famous as the Dow Jones Industrial Average, but it’s superior in many ways, including because it is:
ETFs, created more than 25 years ago, are now among the fastest-growing investment vehicles in the world. Like mutual funds, ETFs are investments that own a bucketful of other investments.
And ETFs can own everything from individual stocks, like QQQ does, to bonds, commodities and currencies. Nearly all ETFs own the investments dictated by an index. QQQ stock owns the stocks in the Nasdaq-100.
But other ETFs own stocks in other indexes such as small stocks and midsize stocks. You can also buy ETFs that only own growth stocks or beat-up stocks called value stocks. Some ETFs only buy stocks held in specific sector indexes, such as information technology or utilities.
And there also more exotic ETFs. Some “inverse ETFs” rise in value when the market falls. And some own commodities like gold or silver.
Technology and communications stocks dominate QQQ stock, accounting for more than two-thirds of the index. That heavy sector concentration is a risk. The QQQ will suffer much more than the S&P 500 if tech stocks correct.
Sector | Weight in QQQ Stock |
---|---|
Information Technology | 50.2% |
Consumer Discretionary | 17.0% |
Communication Services | 17.0% |
Health Care | 5.9% |
Consumer Staples | 5.5% |
Industrials and utilities | 4.2% |
Other | 0.2% |
Investors have choice when looking at buying the Nasdaq 100.
Investors can now own all the same stocks on the Nasdaq 100 at a much lower fee with a new ETF. It’s the Invesco Nasdaq 100 ETF (QQQM). Like the Invesco QQQ Trust, it owns all 100 of the largest non-financial companies on the Nasdaq. But it does it for 0.15% a year, or 25% less than the 0.2% the QQQ charges.
The First Trust Nasdaq-100 Equal Weighted Index Fund (QQEW) owns all 100 nonfinancial stocks on the Nasdaq, too. But unlike QQQ stock, the QQEW owns all 100 stocks equally, rather than weighting them based on their value. The First Trust Nasdaq-100 Equal Weighted Index ETF is smaller than QQQ stock, with assets of $1.4 billion, and charges more (0.58%).
The Direxion Nasdaq-100 Equal Weighted Index (QQQE), like QQEW, owns equal weightings in all stocks in the Nasdaq 100, too. It’s smaller, $438 million, but cheaper with an annual expense ratio of 0.35%.
Few people buy tech stocks with the goal of dividends, but an increasing number of these stocks pay dividends. Apple and Microsoft are decent dividend payers, now. But these dividends are a drop in the bucket as a majority of Nasdaq 100 stocks pay no dividend. Overall, QQQ stock’s dividend yield is just 0.5%, or less than half the yield of the S&P 500.
If you want to own leading Nasdaq companies, it’s tough to beat QQQ. The ETF has vigorous buying and selling during the day, keeping the price you’d get for selling close to the price you pay to buy.
On the other hand, some investors use QQQ stock more tactically. They dart in and out to catch market movements. If you’re this type of investor, you’ll need to pay closer attention to technical action in the broad market. These investors look for the QQQ to push past their 50-day moving average. And that’s 305 on June 24. It’s 5% lower now, so it’s still worth watching but not time to buy. Currently, the QQQ is falling even further. And if it does, that’s another reason to wait.
It’s also important for QQQ to stay above its 21-day exponential moving average. A 10-day simple moving average (SMA) can be too tight and a 50-day simple moving average too loose. IBD Charts do not include the 21-day line. On Leaderboard charts, the 21-day line in drawn in green. Subscribers to MarketSmith can set up custom moving averages.
IBD’s Market Pulse will tell you if the market is in a confirmed uptrend and if now is a good entry point. And Stock Market Today shows you breaking trends in the market that will tell you if you should be in QQQ in the short term, or out. And don’t miss this IBD webinar showing you how to trade QQQ like the pros.
QQQ stock is a great option for investors who want to make sure they don’t miss out on the next Amazon or Google. When leading Nasdaq stocks get big, they land on the QQQ. This is a low-fuss way to own a diversified basket of hot stocks.
Check out IBD Stock Lists and other IBD content to find dozens more of the best stocks to buy or watch.
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