Earnings Could Be Strong in 2024. Consider QQQ & QQQM

The S&P 500 is forecast to deliver double-digit earnings per share growth this year. All 11 global industry classification standard sectors are poised to see earnings per share increases.

Obviously, that’s good news. But experienced investors know that 2024’s EPS growth won’t be linear across all sectors. Simply put, some groups will deliver stronger earnings growth than others. Fortunately, there are some ETFs that grant investors access to multiple high-growth EPS sectors under the umbrella of a single fund.

Enter the Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM). For 2024, the S&P 500 is forecast to deliver EPS growth of 11.7%, solidly above the 10-year average of 8.4%. QQQ and QQQM follow the Nasdaq-100 Index. That benchmark has a long history of delivering EPS growth well in excess of the S&P 500.

QQQ, QQQM Have the Earnings Goods

The sector exposures found in QQQ and QQQM differ significantly from those found in the S&P 500. As such, the Invesco ETFs are potentially better positioned to capitalize on 2024 EPS growth.

“All 11 sectors are predicted to report year-over-year earnings growth in CY 2024. Five of these sectors are projected to report double-digit growth led by the Health Care, Communication Services, and Information Technology sectors,” noted FactSet’s John Butters.

QQQ and QQQM allocate a combined 64.19% of their rosters to tech and communication services stocks. By comparison, S&P 500-tracking ETFs devote “just” 36.84% of their weights to those two sectors. In other words, the Invesco ETFs are better bets to take advantage of S&P 500 EPS growth than S&P 500 funds themselves.

For the first quarter, S&P 500 EPS growth is expected to be 6.6%, followed by 10.7% in the April through June period, and 9% in the third quarter. That growth is forecast to ramp up significantly in the fourth quarter, at 18.4%, according to FactSet. Top-line growth is also expected to be impressive this year, and that’s true across the sectors.

“All 11 sectors are projected to report year-over-year growth in revenues, led by the Information Technology, Communication Services, and Consumer Discretionary (7.2%) sectors,” added Butters.

That’s relevant to QQQ and QQQM investors because those are the three largest sector exposures in the ETFs, combining for over 78% of the portfolios.

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