At times, it seems like the entire tech universe orbits around just one company.
Nothing is bigger than the Big Apple. Not only is it the largest stock holding for individual investors, but also for hedge fund managers and StratFI clients, too. Apple is now bigger than Exxon Mobil by market capitalization, and is the most highly valued company in the world.
That kind of gravitational mass attracts significant influence. Apple now represents 4% of the S&P 500 index. Last year, shares rose a stunning 40%, contributing a full 1.5% to the return of the popular benchmark. As investors put money into index funds, they are often buying shares of Apple.
Without Apple, the tech world would be a much less exciting place. A recent Zero Hedge article notes that “blended Q1 Y/Y EPS growth for the Information Technology sector is 0.7% [but] excluding Apple, the blended earnings growth rate for the sector would fall to -5.1%.”
Apple is pretty much holding the tech sector together right now. So why not hitch a ride on a rising star?
There are plenty of ways to do this. Apple gadgets rely on hundreds of other products made by these companies and more….
Investors need to do their own due diligence, and overdependence on a single customer (such as Apple) is a risky proposition. Even so, some of these suppliers have become investment superstars of their own by joining the Appleverse.
Jim Lee, CFA, CMT, CFP®
Disclosure: Information contained herein is for educational purposes only and is not to be considered a recommendation to buy or sell any security or investment advice. Securities listed herein are for illustrative purposes only and are not to be considered a recommendation. The advisor holds shares of AAPL, SYNA, NXPI, and SWKS as May 1, 2015