“JP Morgan hardware analyst Mark Moskowitz this morning teams up with the folks at the firm’s portfolio strategy confab to discuss Apple (AAPL) as a ‘cyclical’ sector unto itself. Not a cyclical company, but a sector,” Tiernan Ray reports for Barron’s.
AAPL carries greater weight than most industries and several sectors. At 3.7% of the S&P 500, AAPL carries a larger weight in the index than Basic Materials, Utilities, and Telecom Services and would be the 6th largest industry (GICS Level 3). YTD, AAPL has accounted for 11 of the 104-point move in the S&P 500. In other words, as a stock, AAPL is more important than most industries and many sectors. The stock remains underowned institutionally. Of the 282 mutual funds indexed to the Russell 1000, a surprising 40% do not have AAPL as a top 10 holding – this despite the fact that AAPL is the largest stock in the Russell 1000. AAPL at current valuation is undervalued on absolute P/E (12.0x vs. 12.7x S&P 500), its relative P/E (94% vs. historical avg of 164%), or PEG ratio. By our ests, moving to historical avg adds 24- 38 points to the S&P 500 – in short, showing AAPL is important to our Cyclical call. – JP Morgan portfolio strategist Thomas Lee
Read more in the full article here.
[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]