Apple stock’s stunning 2020 performance
Yahoo Finance’s Brian Sozzi breaks down why it was a great year for Apple investors.
Video Transcript
- We talked a little bit yesterday about Apple's big year and how stunning it has been just because the size of the company. Brian, I know you dug into this a little bit more and are looking kind of into the driving factors and stats behind Apple's big year. What did you find out?
BRIAN SOZZI: Yeah, really, a couple of amazing stats. Let me set this up real quick. You have Apple's market cap, it hit $2 trillion on August 19 and it hasn't looked back. On December 31, 2019, Apple's market cap stood at $1.29 trillion-- today, right now, almost $2.3 trillion.
So those big numbers, Julie, that we talked about yesterday, they continue to grow. They have continued to grow. Look at Apple's price to earnings multiple. Right now, 33 times on a forward basis.
That is about 2 times more than the five-year average on Apple. So another way to look at it, Apple is trading at a premium rel to its five year average P/E. Wonky, but very important to a lot of folks that plug numbers into a spreadsheet and calculate Apple's fair value.
And last but not least, a very simple number, 85%-- that's how much Apple's stock is up year today, almost 2 times the gain in the NASDAQ composite figure for the year to date. And what's interesting here, guys, is that 20% of that gain has come in the past month, and a lot of the conventional wisdom out there on the street, it's-- it's been because of the speculation about an Apple car.
We've talked about it extensively. Maybe by 2025, Apple comes out with a $100,000 electric car. But I think if you really dig down to the Apple story right now, you poke around on Wall Street, and what you're seeing in the stock is just a lot of optimism around Apple's core product, the iPhone. There continues to be really strong, positive research out from the cell side, notably-- a company like a JP Morgan saying that.
A lot of these iPhones have seen very, very strong demand. Not just the regular iPhone 12, the Pro, across the board, even the MACS despite the higher prices. And that is really what's driving the stock and it's likely to drive the stock next year, ultimately fueling this 5G supercycle thesis that is now starting to play out.
- A-- and I think, Brian, all that stuff kind of feeds into this optimism around Apple. I just called out one other amazing stat for Apple, which is what's happened in their Mac business. Everyone's been at home, kids are being homeschooled, we've got 50% sales growth in a business that investors really didn't care about at all, right?
$9 billion in the last quarter. That's up from about $6.5 in the prior year's quarter. And I just think that's-- it's an amazing illustration of how these kind of forgotten growth levers for some companies got pulled because of how quickly everything happened during COVID.
- Yeah, we'll see though if that momentum keeps up right if people are still going to be home this year, if they've already bought the computers that they're going to buy, or are they going to keep buying them? We shall see.
