Apple’s market cap is bigger than the combined market cap of all BSE 500 companies and twice as big as that of the 30-share Sensex.
Apple Inc: Rs 158 lakh crore
All BSE 500 stocks: Rs 148 lakh crore.
All Sensex stocks: Rs 77 lakh crore
- Since 24 August 2019, Apple shares have more than doubled in value from $212 to $500, a return of 133% in one year.
- Apple stock has given annualised returns of 32% in the past 10 years. But dollar appreciation has added to gains of investors in other countries.
- Rupee has fallen 66% against the dollar in past 10 years. For investors in India, the returns are 39% in rupee terms.
- Its massive cash reserves of $193 billion (Rs 14.3 lakh crore) can buy India’s most valuable company Reliance Industries (market cap Rs 13.41 lakh crore) and still have some cash to spare.
- Apple does not have a search engine but Google pays it more than $9.6 billion (Rs 70,000 crore) for making it the default search engine in its devices. This is more than double the 2019-20 net profit (Rs 32,447 crore) of India’s most profitable company TCS.
Have you bought Apple products … or invested in its shares?
If the money spent on Apple products was invested in the company’s shares instead, it would have grown manifold.
Share price is adjusted for splits and dividends. Data as on 24 Aug 2020
Apple not alone. Other US stocks also in limelight
A group of tech oriented stocks have done exceptionally well in the past 12 months. Some of these gains are obviously due to the Covid crisis that is forcing people to stay indoors and go online. Collectively called FANGMAN stocks, these seven scrips, including Apple, account for more than 50% of the total market cap of the S&P 500.
Facebook suffered a slowdown ad revenue growth due to the Covid, but things have started looking up recently. The share is trading at a PE of about 25.8, its highest valuation since 2017 driven largely by better than expected second-quarter results. Analysts have raised revenue forecasts for 2020 to $80.1 billion from $77.7 billion at the end of July.
Amazon shares were stuck in a sideways rut for a long time. But Covid changed everything and unleashed a tsunami of new demand for household and home office supplies. The company has hired more workers and increased salaries to help meet the surge in demand. Analysts expect the good times to continue for the company for at least the next 2-3 quarters.
Its subscriber base has surged due to the Covidinduced lockdown. But analysts believe this could be a one-time bonanza. Netflix expects subdued growth over the next few quarters. Even so, the company’s global streaming business (which brings in 53% of revenues) is expected to keep growing even as the domestic market saturates.
Alphabet is trading at a forward PE of just above 35, which is higher than its five-year average of around 24. However, profits have suffered as ad revenue fell because of Covid. Analysts predict a 10% decline in earnings this year. While ads still make up most of its revenues, Alphabet has $121 billion in cash to open new business lines to reduce dependence on ads.
CEO Satya Nadella has helped reinvent Microsoft as a cloud company and given it new revenue streams to explore. Microsoft is trading at a forward PE of around 32, which is well above its five-year average of just over 23. But profit growth has remained steady and analysts forecast earnings increases of just over 12% for this year and almost 14% in the next fiscal.
NVIDIA is quickly emerging as the new leader in the semiconductor manufacturing business. It is technologically more advanced, has a nimble balance sheet, and generates lots of cash to further strengthen its leadership. However, stock is trading at a PE of 63.5, which assumes that the double-digit growth in earnings will continue for a few more years.
How you can also get a piece of this action
Financial planners recommend that one should have about 5-10% of the equity portfolio invested in global stocks. Here are a few ways you can invest in foreign stocks.
You can open an account with a foreign brokerage house or an Indian entity which facilitates such investments. Many such outfits have mushroomed in the past few months. Leading Indian brokerage houses also have tie-ups with foreign brokers. You can invest in foreign stocks through them after completing all the paperwork required.You can also invest in foreign securities by buying mutual funds from foreign fund houses. Just like in case of stock investments, you will have to comply with the rules for mutual fund investors in the destination country.
You can also invest in ETFs linked to foreign indices. Motilal Oswal, for instance, has a Nasdaq ETF that is traded on the stock exchanges like any other share. All you need is a demat and trading account with a broker.
The other way to invest in global stocks is to invest in global funds or domestic schemes with some portion of their corpus invested in foreign stocks. Motilal Oswal S&P 500 Index Fund is an open-ended scheme that replicates the S&P 500 index. The Parag Parikh Long Term equity Fund invests almost 25% of its corpus in US stocks, including Amazon, Alphabet and Facebook.
Investing through global funds is the most convenient way to invest in global stocks. Though the individual does not take buy and sell calls, he does enjoy all the advantages that mutual funds offer.