HOLLYWOOD, FLA. — Apple reported another blowout quarterly profit — and its stock will likely grow even more in your S&P 500 portfolio. But at what point are you counting too much on one stock?
XThat's the $1.4 trillion question — the market value of Apple (AAPL) — as its shares soared 105% over the past 12 months. Apple added $661.2 billion in market value to the S&P 500 since last January, according to an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
That's more than any other company contributed to the S&P 500's added value. And Apple single-handedly accounts for 12.2% of the S&P 500's net gain of $5.4 trillion over the past 12 months.
Should You Buy Apple Stock Now?
And get this. Apple plus just four other stocks, Alphabet (GOOGL), Facebook (FB), Amazon (AMZN) and Netflix (NFLX) account for 15% of the S&P 500's market value. Apple alone holds 4.8% of the S&P 500's value. That's up from 3.1% a year ago.
The market's concentration in just a few winners concerns some.
"Size can be an advantage, but the advantage can also go away," Vito Sciaraffia, chief investment officer at Innealta Capital, said at the Inside ETFs conference. His firm is looking for ways to help investors stay invested in big technology stocks, but also diversify.
Apple's Weight In Sectors Outgrows Even The S&P 500
Apple is hijacking sectors even more than it's ruling the S&P 500.
The stock now accounts for more than 20% of the Technology Select Sector SPDR ETF (XLK). That's the largest concentration of the stock in any ETF. But Apple is also a 19% holding in the Fidelity MSCI Information Technology Index (FTEC) and 18% of the Vanguard Information Technology ETF (VGT).
What about the popular $91 billion in assets Invesco QQQ Trust (QQQ)? The index ETF, which owns the 100 largest non-financials on the Nasdaq exchange, holds 12% in Apple. That's more the double Facebook's 4.5% weighting in the index.
Top Stocks Take Over The S&P 500. So What?
Not everyone is unnerved that just a few runaway winners hold so much weight.
"I'm not an aggressive growth investor and I'm not a value investor. I'm a stock investor," said Stephen Weiss, managing partner of Short Hills Capital Partners at Inside ETFs. "And when I look at a company I decide, do I want to own it or not. It could be worth a trillion and a quarter or 2 trillion, I just ... don't look at how the world categorizes it."
Apple commands a 94 IBD Composite Rating. Analysts think its earnings will grow 16% to $13.79 a share this fiscal year.
And Weiss adds, "those who cannot concentrate their portfolios operate out of ignorance."
The Most Valuable S&P 500 Companies
| Company | Ticker | 12-mo stock % ch. | YTD % stock ch. | Market value 1/29/2020 ($ billions) | % of S&P 500's market value | Composite Rating |
|---|---|---|---|---|---|---|
| Apple | (AAPL) | 105.4% | 8.2% | $1,393 | 4.8% | 94 |
| Microsoft | (MSFT) | 60.7% | 4.9% | $1,262 | 4.4% | 97 |
| Alphabet | (GOOGL) | 35.6% | 8.3% | $1,001 | 3.5% | 99 |
| Amazon.com | (AMZN) | 16.3% | 0.3% | $918.8 | 3.2% | 65 |
| (FB) | 51.0% | 6.1% | $621.0 | 2.2% | 99 | |
| Berkshire Hathaway | (BRK.A) | 10.9% | -1.1% | $547.7 | 1.9% | 61 |
| Visa | (V) | 50.3% | 8.0% | $437.1 | 1.5% | 98 |
| JPMorgan Chase | (JPM) | 29.0% | -3.6% | $421.6 | 1.5% | 91 |
| Johnson & Johnson | (JNJ) | 14.7% | 2.5% | $393.5 | 1.4% | 85 |
| Walmart | (WMT) | 20.6% | -1.9% | $330.8 | 1.1% | 53 |
Click on ticker symbol for more information
Source: IBD, S&P Global Market Intelligence
Follow Matt Krantz on Twitter @mattkrantz
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