Is QQQ stock a buy right now?  Here are the profits, the charts show

You are looking for high growth stocks with huge potential – especially like are tech stocks taking a hit? Apple or Microsoft stock? Amazon.com or Facebook? Why choose? Own them all.




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QQQ Shares or Invesco QQQ Trust (QQQ), puts the 100 most important Nasdaq stocks into your portfolio in one trade. Best of all, it skips the financials, focusing your portfolio on companies in faster-growing sectors. QQQ is a cheap way to own companies building the future economy.

And instead of trying choose the right technology stock to buy and when to buy it, make one trade and own them all now.

All this at the lowest fee of only 0.2% per annum. After a commission war that started in 2019 from Charles Schwab (SCHW), Interactive brokers (IBKR) and TD Ameritrade (AMTD), you can buy this fund commission-free. That means you pay just $20 per year for every $10,000 invested.

How do you get on board?

What is QQQ stock?

QQQ shares are the fifth most popular exchange traded fund in the worlddetention more than $160 billion in investors’ assets. He tracks Nasdaq-100 Index, which owns the most valuable non-financial stocks on the Nasdaq. QQQ is also the largest ETF that tracks a narrower share of the stock market. The the largest ETF is SPY broad stockwhich owns all the stocks in the S&P 500.

But while QQQ shares are not a broad-market ETF, they do hold the most valuable stocks traded on the Nasdaq. This definition means that QQQ is very technological. Most of the world the biggest tech stocks still trade on the Nasdaq. And given that tech continues to be the best-performing sector, the giants like it Microsoft (MSFT) and An apple (AAPL) plus technically adjacent Amazon.com (AMZN) are only becoming more important in ETFs.

What are the top 10 holdings in QQQ stock?

QQQ stocks are heavily skewed toward megacap tech stocks. All of its top 10 holdings are technology or technology-related companies such as Amazon.com.

Company Symbol Weight in stock QQQ
An apple (AAPL) 13.6%
Microsoft (MSFT) 10.1%
Alphabet (GOOG) 6.7%
Amazon (AMZN) 5.4%
Tesla (TSLA) 3.2%
Nvidia (NVDA) 3.0%
PepsiCo (PEP) 2.3%
Costco Wholesale (PRICE) 2.2%
Meta platforms (PRICE) 2.0%
Broadcom (BRCM) 1.9%
Source: Invesco as of 18 November 2022

Why is the Nasdaq 100 better than the Dow Jones?

The Nasdaq 100 isn’t as well-known as the Dow Jones Industrial Average, but it’s better in many ways, including because it:

  • Wider: The Nasdaq owns 100 shares to the Dow Jones’ 30.
  • A more complete representation of the major market leaders. The Nasdaq 100 gives more weight to the companies with the largest trading value on the market. This is perhaps a better method than the Dow. The Dow weights stocks based on their prices per share. This makes no logical sense.
  • More rules based. The Nasdaq 100 relies less on human intervention. Changes are made in both the Dow and the Nasdaq 100 as stocks move in and out. People choose what’s in the Dow and when changes are made. But because the Nasdaq 100 holds all the major stocks on the Nasdaq, there’s no judging what goes in and what goes out each year.
  • Better Performer: Perhaps most importantly, the Nasdaq 100 is outpacing the Dow in terms of gains. QQQ stock has returned 13.2% annually over the past 15 years, which includes dividends. SPDR Dow Jones Industrial Average ETF (DIA) returned just 9.0% annually during that time. And over the past five years, the QQQ has returned 13.9% annually, outpacing the Dow’s 9.7% return.

What is an ETF?

ETFs, created more than 25 years ago, are now among the fastest growing investment vehicles in the world. Like mutual fundsETFs are investments that own a whole bucket of other investments.

And ETFs can hold everything from individual stocks, as QQQ does, to bonds, commodities and currencies. Almost all ETFs hold the investments dictated by an index. QQQ shares hold the shares in the Nasdaq-100.

But other ETFs hold stocks in other indexes, such as small- and mid-cap stocks. You can also buy ETFs that only hold growth stocks or stocks called value stocks. Some ETFs buy only the stocks they hold specific sector indicessuch as information technology or utilities.

And there are more exotic ETFs. some “inverse ETFs” rise in value when the market falls. And some own commodities like gold or silver.

What are the best sectors in QQQ stocks?

Technology and communications stocks dominate QQQ stocks, accounting for more than two-thirds of the index. This heavy concentration of the sector is a risk. The QQQ will suffer much more than the S&P 500 if tech stocks improve.

Sector Weight in stock QQQ
Information Technology 50.5%
Communication services 15.3%
User discretion 14.2%
Healthcare 7.6%
Consumer goods 7.0%
Industries and utilities 5.2%
others 0.2%
Source: Invesco as of November 18, 2022

What other options are there? How much do they cost?

Investors have a choice when looking to buy the Nasdaq 100.

Investors can now own all of the same Nasdaq 100 stocks on a much lower fee with new ETF. This is 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 so for 0.15% per year, or 25% less than the 0.2% that QQQ charges.

The First Trust Nasdaq-100 Equal Weighted Index Fund (QQEW) also owns all 100 non-financial stocks on the Nasdaq. But unlike QQQ shares, QQEW owns all 100 shares equally, rather than weighting them based on their value. The First Trust Nasdaq-100 Equal Weighted Index ETF is smaller than QQQ shares, with $1.4 billion in assets and charges more (0.58%).

The equal-weight Direxion Nasdaq-100 Index (QQQE), like QQEW, also holds equal weights across all stocks in the Nasdaq 100. It’s smaller at $438 million, but cheaper with an annual expense ratio of 0.35%.

Does QQQ stock pay dividends?

Few people buy tech stocks with dividend targetbut an an increasing number of these stocks pay dividends. Apple and Microsoft now pay decent dividends. But those dividends are a drop in the bucket, as the majority of Nasdaq 100 stocks do not pay dividends. Overall, the dividend yield on QQQ stock is just 0.7%, or less than half of the S&P 500’s yield.

QQQ Stock Technical Analysis — Buy ​​Now?

If you want to own top Nasdaq companies, it’s hard to beat QQQ. The ETF has vigorous buying and selling throughout the day, keeping the price you would get for selling close to the price you pay to buy.

On the other hand, some investors use QQQ shares more tactically. They dart in and out to catch market movements. If you are this type of investor, you will need to pay more attention to the technical action of the broad market. These investors are looking for QQQ to break above its 50-day moving average. And that’s 277 on November 18. It is now 3% higher, so now is the time to consider buying.

It is also important for QQQ to remain above its 21-day exponential moving average. The 10-day simple moving average (SMA) may be too narrow and a 50-day simple moving average too loose. IBD’s charts do not include the 21-day line. On ranking charts, the 21-day line is drawn in green. Subscribers to MarketSmith can set custom moving averages.

IBD 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 revolutionary market trends that will tell you whether you should be QQQ in the short term or out. And don’t miss this IBD webinar showing you how to trade QQQ like the pros.

Conclusion

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 Nasdaq’s leading stocks go big, they land on the QQQ. It’s an easy way to own a diverse basket of hot stocks.

See IBD stock lists and other IBD content find dozens more of the best stocks to buy or watch.

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