Apple does it again!

Critical for investors to have an international strategy

By William Meyer

It’s official. Apple wins. The first trillion-dollar company.

And I am not surprised. In fact, I predicted this years ago.

It is impossible to comprehend a trillion dollars. A trillion dollars is one thousand billion. Apple is the first company to hit this milestone. Its market capitalisation (number of issued shares multiplied by the share price) exceeded this level for the first time this month.

I am not at all surprised that Apple is worth a trillion dollars. What surprises is that it is not worth much more! The market values Apple at only 18 times earnings, while it values Amazon at more than 100 times earnings. And Amazon is the second most valuable company in the world – valued at $918-billion. If Apple was valued like Amazon it would be worth more than $5-billion.

Amazon’s long term promise

Why is Apple worth so much?

Well let’s look at its flagship device, the iPhone, and particularly the latest, top-of-the-range phone, the iPhone X.

Apple explains that the iPhone X uses an A 11 bionic neural engine that performs up to 600 billion operations per second for real-time processing. The neural engine is designed for specific machine-learning algorithms and enables face ID, animoji and other features.

Amazon is the second most valuable company in the world.

The latest news is that a new health-focused chip will be engineered. The iPhone and Apple watch already include features that can track exercise, cardiac health and sleep quality, and the company is working on a non-invasive blood-sugar monitor.

Just getting started

Apple also sells health-monitoring equipment including a sleep monitor, a wireless blood pressure monitor, and a blood glucose monitoring kit. The healthcare market is huge.

In August 2011, I wrote an article titled, “For Apple the party is just getting started”. In this article I predicted that Apple would soon become the most valuable company in the world, exceeding the market capitalisation of Exxon Mobil. Sales in China had grown by a factor of six times and management said it was just getting started.

In March 2012, I penned an article titled, “The greatest growth stock of all time”. Again I urged readers to buy. In May 2017 I again recommended Apple shares.

May 2017: A resounding “Yes!” to Apple

In September last year my article was titled “The race to one trillion dollars”.

In this article I stated: “It is my strong belief that Apple is going to win this race and that it will be the first company to be worth one trillion dollars! Why not come along for the ride.”

And I don’t want to say, “I told you so!”

Critical for investors

If you bought Apple shares in August 2011, when recommended, you would now have increased your investment by a few hundred percent.

I also recommended Amazon shares when they were trading at $185. They are now trading at $1 900. That’s a return of 1000% in dollars!

With a list of challenges facing South Africa, it is now critical for investors to have an international strategy.

● If you are not happy with your portfolio performance or would like a second opinion, please do not hesitate to contact Fenestra for a free review of your portfolio. 021 689 7855 or fam@mweb.co.za

*Main picture credit: Mitch Lensink/Unsplash