With the arrival of December, there’s the usual talk about a Santa Claus rally on Wall Street. Indeed, the last month of the year has a reputation for being kind to equity investors, and December is part of the better six-month stretch of the year for stocks. With that in mind, some investors may be perusing equity-based exchange traded funds over the next several weeks. The Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM) could be names to consider because both are homes to stocks with penchants for performing well in December.
QQQ and QQQM both track the Nasdaq 100 Index, meaning their lineups are identical. The marquee difference between the two products is that QQQM is better suited for long-term investors due to its lower annual expense ratio of 0.15%, or $15 on a $10,000 stake. The ETFs’ linkage to the Nasdaq 100 Index is important because that index is home to some the S&P 500 members that frequently deliver December upside. CNBC recently published a list of those names.
“Each stock on list has a median gain of at least 1% over the past 10 Decembers, buy ratings from 55% or more of the analysts covering the stock, and at least 25% potential upside to the average price target on the stock. To be sure, past performance is not indicative of future returns,” reported Tanya Macheel for the financial news network.
Among the stocks residing in QQQ and QQQM with reputations for December is Google parent Alphabet (NASDAQ:GOOG), which accounts for 6.6% of the ETFs’ rosters. The internet search giant averaged a December gain of 1.8% of the past decade and has upside of 32.1% relative to the consensus price target.
Two semiconductor stocks — Broadcom (NASDAQ:AVGO) and Qualcomm (NASDAQ:QCOM) — also appeared on the CNBC list. Broadcom averaged an impressive December gain of 7.4%, while Qualcomm averaged a 1.1% jump over the past 10 Decembers. Those two stocks combine for 3.25% of the ETFs’ portfolios. Fortinet (NASDAQ:FTNT), which is a smaller holding in QQQ and QQQM, is also usually a solid December performer, averaging a gain of 4.5% in the final month of the year.
“Several tech stocks also made the list, including Alphabet, Broadcom, Fortinet and Qualcomm. Payments technology provider Global Payments, a financial stock, is also on the list with a 1% median gain from the last 10 Decembers,” according to CNBC.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.