Invest in Apple-Lookalikes

This week Apple hit $1,000,000,000,000 in market cap. Yes, you read that correctly. It has twelve zeros. Such market valuation pushed the 10-year return of an investment in the company's stock to ~ 600%. The reaction to such an impressive growth rate was ... mix.

Apple investors naturally loved it. The non-investors however, didn't like it a bit. Some even went to the length to explain how the stock's increase in price has nothing to do with the strength of the company. The desire to be contrarian and say things that most people do not agree with is a pretty strong desire within the intellectual community. And it is not only limited to the Apple-deniers. It's in all of us. Saying things in contradiction to the common thread of the conversation gets you a lot of social credit. People applaud you, you get Twitter followers, and your articles get published in Business Week. But, as an investor, being a contrarian usually costs you. The desire to appear intellectual limits your ability to see the facts that help you make sound investment decisions.

In this edition of Stock Card Weekly, we are looking at the top four traits that made Apple a trillion-dollar company and introduce you to six companies that share such characteristics with Apple. If you tend to deny the superiority of any of these companies and want to be a contrarian, remember how Business Week had to make fun of itself by posting a picture of an old front-cover page when Apple's doom was predicted. Don't be like Business Week!

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Four traits of a trillion-dollar company
 
There is no denying that Apple hasn't been the most innovative company on earth for quite some time. That's the main reason many financial analysts, technologists, and investors have been depriving themselves of a chance to invest in Apple. But, being innovative is just one factor to consider. While Apple hasn't been as innovative as it once was, it has been overcompensating in four other factors:

1) Diversifying sources of revenue
In the course of a few years, Apple has quietly reduced its reliance on selling devices. By the end of 2017, 19% of Apple's revenues was due to non-device services such as Apple pay, Apple Music, other subscriptions, etc. 

2) A lot of cash 
Cash is king, and in the case of Apple, the company has a lot of it... hundreds of billions... Even if the company is not the most innovative anymore, its cash has allowed Apple to back up its shareholders' investments. Just recently, the company has started to pay off its investors indirectly by buying back its shares in billions of dollars and has dramatically increased its investment in research and development efforts.  

3) A strong brand
The company's brand is global and appeals to a large group of people around the world. The Apple brand is desirable, and people generally have a positive perception of its products. 

4) A growing market
While consumer electronics is not the fastest market one can invest in, it is still a healthy market. More people around the world are ditching their old devices to upgrade to smarter and more digitally connected versions. It is not double-digit growth, but it still grows faster than the overall economy. And, being in such a market means the size of the pie is still growing, and the growth of the company doesn't always have to come through battling the competitors to death. Five years ago, none of us wanted or needed a digital watch, now, most of us want one. If not a watch, but a fitness tracker or similar devices. 

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​Now that we know about such traits that have contributed to the success of Apple as an investment, as is the tradition around Stock Card HQ, let's run the machines and find other companies that share such traits with Apple. They may not become a trillion-dollar company, but they are at least worthy of your attention.

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Do you want to see which one of these six stocks we have already invested in and why? Subscribe to Stock Card Premium. Stock Card Premium members have the advantage of discovering and validating investment ideas without making the common and dire mistakes of other investors.

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