Technology stocks in the United States and Canada were battered in the final months of 2018. The tech-heavy NASDAQ fell into correction territory before the year closed out, and there were concerns over the decline in earnings growth heading into 2019.
The Vanguard Information Technology ETF (NYSE:VGT) rose 2.87% on January 30. The US Federal Reserve announced that it would pause its rate tightening path and review in June, which sparked a rally in the markets. The Vanguard IT ETF has now climbed 7% in 2019 so far. This is after hitting 52-week lows in late December. Is it worth buying today?
The top two holdings in this ETF are Apple Inc. and Microsoft Corp. Apple earnings barely beat expectations in the first quarter and battled declining iPhone sales.
Even still, the tech giant reported an all-time high in earnings-per-share of $4.18. Revenue from the iPhone fell 15% year-over-year but revenue from all other products and services grew 19%.
Microsoft saw revenue rise 12% year-over-year to $32.5 billion in the second quarter of fiscal 2019. The company posted strong growth but there is lingering concern over slower growth in its cloud business.
This ETF also offers exposure to companies like VISA and Mastercard, which have seen soaring profits as interest rates have increased. The exposure to the bulging credit sector gives this ETF an added bit of diversity that should appeal to investors.
Currently the ETF boasts an RSI of 60, which is a few points shy of overbought territory as we look ahead to February.
