• Can the big four banks recent momentum be maintained? Stuart comments he will be looking for signs of diminishing risk and improved performance. Watch here.

Apple at $2 trillion

25082020_Apple

Apple at $2 trillion

Last week Apple’s share price hit a new record and the market value of the company rose above $2 trillion for the first time. There’s still a lot to like, but we are proceeding with caution for now.

We can’t say that we are surprised by the rally in Apple shares and we’ve been backers of the stock for quite some time now. After all we believe that Apple will continue to win in a massive marketplace for digital devices and services that is being driven by the rapid digitalisation of consumers’ lives and accelerated by the COVID-19 pandemic.

The importance of Apple to its user base was demonstrated in its recent quarterly earnings result. In a period where the world was coming to grips with a once-in-a-century pandemic, Apple grew its sales by 11 per cent compared to the same period last year – a record June quarter performance.

iPhone sales returned to growth, and the Mac and IPad had standout results, growing 22 per cent and 31 per cent respectively, as more people shifted to work-from-home. Apple’s services business reached its multi-year target of doubling revenues from 2016 six months early and Apple now has over 550 million paid subscribers underpinning its growing base of recurring revenues.

But for now, we’ve lightened the holding of Apple in the long portfolios, to account for some nearer term risks. We recognise that as tensions between the US and China rise with President Trump ordering the sale or shutdown of social media app TikTok, Apple could be collateral damage in any retaliation by President Xi Jinping.

While Apple may sail through unscathed, the stock is certainly not pricing any hiccups (or worse) at its current price. We have rigorous valuation and risk/reward disciplines, and this is reflective of the process we follow to safeguard client capital and mange for its long-term compounding. We look forward to owning more of this winner again in time.

Apple stock price last five years

Screen Shot 2020-08-24 at 1.58.49 pm

Source: Bloomberg

The Montgomery Global Funds and Montaka own shares in Apple. This article was prepared 24 August with the information we have today, and our view may change. It does not constitute formal advice or professional investment advice. If you wish to trade Apple you should seek financial advice.

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Christopher is a Portfolio Manager for the Montaka funds and the Montgomery Global funds. He joined MGIM at establishment in 2015.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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