Wednesday’s ETF To Watch: Technology ETF (IGN)

by on February 1, 2012 | ETFs Mentioned:

Markets are off to a bland week as a mixture of overseas drama and lower than expected data on the home front have combined to put a halt to the nice rally that 2012 had brought. Amidst all of the drama, Wall Street has been circulating rumors of a Facebook IPO and it seems likely that the company will file for this offering later today. This IPO, if its estimated valuation of $100 billion holds, will be the largest in history and will mark yet another hot tech company turning public in the last year. It will also mean that Facebook will become a key member of earnings season, which is still on the center stage [see also What Will A Facebook IPO Mean For ETFs?].

Today will see an earnings statement from telecom giant Qualcomm (QCOM). Founded in 1985, Qualcomm is a global telecommunications corporation that manufactures digital wireless products, including cell phones as well as satellite tracking devices. The stock has a market cap just below $100 billion and an average daily volume that tops 14 million. Income investors will also enjoy QCOM’s 1.5% dividend yield. It should be noted that their current P/E ratio is sitting near 23.5, a level that some may consider too expensive [see also Five Leveraged ETFs Delivering Big Gains].

Kicking off February, QCOM’s earnings report will be a big moment for the entire tech sector. Analysts have predicted EPS of $0.9 with revenues around $4.6 billion. This report will actually mark QCOM’s first quarter as their fiscal year ends in September as opposed to December. The company has surpassed their last four earnings benchmarks and with the mixed bag of results we have seen from this earnings season, equities could certainly use a big win [see also Earnings Spotlight: Exxon Mobil (XOM)].

With this earnings announcement on tap, today’s ETF to watch will be the S&P North American Technology-Multimedia Networking Index Fund (IGN). QCOM accounts for the second highest holding in the fund, taking home an allocation of 8.7% [see also High Tech ETFdb Portfolio]. Other big name holdings include Juniper, Cisco, and Research in Motion [try our Free ETF Stock Exposure Tool]. Despite a tough 2011, IGN has managed to gain nearly 8% this month alone, making it an enticing buy for investors. Tomorrow’s statement from QCOM will not come until after market close, but those looking to make a play on the announcement will need to buy in tomorrow, as this fund (as well as QCOMM’s stock) will likely gap upon opening on Thursday.

Disclosure: No positions at time of writing.