Apple Inc. (AAPL, Financial), Warren Buffett (Trades, Portfolio)’s top holding, reached a market capitalization of $1 trillion Thursday morning, beating FAANG rivals Amazon.com Inc. (AMZN, Financial) and Alphabet Inc. (GOOGL, Financial)(GOOG, Financial). Despite this, the Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) CEO's favorite market indicator is still near its all-time high of 148.50%.
Apple reaches new all-time high on strong fiscal third-quarter earnings
The Cupertino, California-based tech giant said in its third-quarter report that net sales increased 17% year over year on higher iPhone, Services and Other Products sales. iPhone sales increased 20% year over year while the latter two categories both increased over 30% year over year.
Shares of Apple reached an intraday high of $207.05, the share price required to propel Apple to a $1 trillion market cap. The company traded approximately $15 higher than its close on July 31, the day the company released its earnings.
GBH Insights analyst Dan Ives told CNBC the company’s landmark milestone underscores “how powerful the Apple ecosystem has become over the last few decades” and how founder Steve Jobs and current CEO Tim Cook made sure it is not just a hardware company. Columnist Sara Salinas added that while Amazon reached a market cap of $900 million in July, Apple “got a head start,” hitting the $900 million market cap threshold in November 2017.
U.S. stock market remains significantly overvalued
Buffett’s favorite market indicator stood at 142.8% on Thursday, approximately 0.7% higher than its July 2 value and about 2.5% lower than its all-time high. The U.S. stock market is expected to return -2% per year based on current market valuations.
Facebook Inc. (FB, Financial) tumbled close to its five-year minimum price-sales value and approximately $80 below its median price-sales value on weak revenue guidance for the remainder of the year. Despite this, most of the FAANG stocks, including Apple and Google, trade above their median price-sales valuations.
Amazon and Tom Gayner (Trades, Portfolio)’s Markel Corp. (MKL, Financial) join Google in the “Thousand Dollar Stock Club,” companies with a share price between $1,000 and $2,000. Both Amazon and Markel are trading near their 10-year maximum price-sales valuation.
See also
Berkshire co-managers Buffett and Charlie Munger (Trades, Portfolio) underscored four criteria for good companies: predictable earnings, expanding profit margins, no meaningful debt while growing business and trading at a fair price.
GuruFocus added the annualized returns over the past year, three years, five years and 10 years for several model portfolios, including the “Most Broadly Held” strategy and the “Undervalued Predictable” strategy. The two strategies have achieved annualized returns that outperformed the Standard & Poor’s 500 index benchmark over the past 10 years.
Disclosure: No positions.
