Apple is more valuable than the U.S. energy sector

Natural resources in general have been weighed down by concerns over slowing global economic growth.

From the Financial Times:

Apple is now worth more than all large-cap US energy stocks put together. A roaring share rally has pushed the iPhone manufacturer’s market capitalisation to nearly $1.2tn, surpassing the value of the S&P 500 energy sector and wresting back the crown of the world’s most valuable listed company from rival Microsoft.

Apple’s shares have climbed almost 70 per cent this year, touching a new high of $267.84 earlier this month. That has wrongfooted many fund managers who fell out of love with the company last year on concerns over the mounting trade war and slowing iPhone sales…

By comparison, the overall market cap of the S&P 500 Energy index currently stands at $1.12tn. While swaths of global markets have roared higher this year, oil prices have failed to claw back the losses of the last quarter of 2018, and have mostly meandered around the $60-$70 a barrel range.

Investors are also starting to turn against over-indebted and climate-unfriendly industries like energy, according to Goldman Sachs. “Not only are these industries still facing too much capacity, in our view, but they also have too much debt relative to their earnings and are carbon intensive, all three of which have discouraged investors in 2019,” the bank’s analysts said in a note.

My take: Remember when the market caps of Apple and Exxon Mobil were neck and neck?

7 Comments

  1. Jerry W Doyle said:

    “…. My take: Remember when the market caps of Apple and Exxon Mobil were neck and neck?”

    I believe that it is safe to say that Exxon Mobil essentially is a declining energy company with a declining consumer demand going forward. Apple, conversely, is a burgeoning company with an exponentially increasing consumer demand going forward.

    I use Exxon Mobil products only as needed and if I live long enough I may be able to break my oil/gas energy dependency and go to alternative fuels.

    I use Apple products even when I do not need them and will buy more Apple products and services going forward.

    Apple has a titivating and titillating method of iteration and refinement of its products and services that just keep me going back to purchase more products and services. Let me tell you what happened today.

    I ordered the other three new colored Watch Sports Bands announced Thanksgiving Day. They arrived via FEDEX today. I’m in love with those colored Sports Bands and enjoy daily choosing which colored band to wear with my outfits.

    I own every colored Sports Bands Apple has manufactured, all 68 colors. At $50 per band, that is $3,400. Additionally, I have the Milanese Loop Band, another $100. That is a total of $3,500 of Watch bands.

    During this period, I have owned two Apple Watches: the Original Stainless Steel Case released in the spring of 2015 and currently, the Series 4 Stainless Steel Case. I cannot remember exactly how much I paid for each Watch, but I believe it is about $600 per Watch for a total of $1,200.

    Summary: I have over the years spent (so far) three times more for Watch bands than for the Apple Watch, and I suspect that the margins on those bands are a higher percentage than the margins on the Watches.

    When Apple releases the next three new colors I will buy them and the others to follow. I have become a collector of Apple Watch Bands to go with my clothing outfits.

    Yes, I probably am the anomaly, but I know many people who do buy the new color bands when Apple releases them.

    Do consumers go purchase oil/gas commodities when they do not need them?

    Apple has this method of making me desire their products and services, and it is difficult not to jump-in and purchase even when perhaps, I do not need to do so. With Apple, though, I enjoy doing so.

    Name me a consumer who enjoys going to Exxon Mobil to purchase fuel from hell; especially when we are switching to fuels from heaven.

    In summary, Exxon Mobil is a declining industry and Apple still is in its embryonic stages of development. -:)

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    December 2, 2019
    • David Emery said:

      My friend who pays more attention to energy stocks says that XOM has had a particularly rough time this year. (He convinced me to buy some Chevron a couple years ago. The 4% dividends have been nice, but my AAPL appreciation has been a lot nicer 🙂 🙂 )

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      December 2, 2019
  2. Gregg Thurman said:

    I watched a very detailed scientific documentary on cold fusion yesterday. It consisted primarily of interviews with academics and was predictably divided into two camps: those that believe it hasn’t been achieved and those that say it has. Interestingly, for profit companies are springing up offering a product the figuratively looks like a cold fusion duck and sounds like a cold fusion duck, (they are avoiding the debate on whether their product is cold fusion by avoiding the descriptor entirely) getting 1000X more energy out than put in using the technology the camp saying it can be done are championing. Cold fusion is happening at less than 200 degrees Celsius. Results are reproducible and have been at numerous research universities around the globe. Cold fusion by-product is hydrogen, oxygen and some rare earth elements. The method used does not require heavy water.

    The commercial examples were about a one foot cube in size and theoretically produces 150Kw for a year, way more than an electric vehicle requires.

    Due to memory limitations on my part some of the details described above may be off a bit.

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    December 2, 2019
    • David Drinkwater said:

      I hope that you are right on this and that cold fusion comes to profitable fruition soon, but I suspect that it will take a while, especially in mobile form (i.e. automobile engine applications). I would more likely expect it to find success in fixed applications at first. Possibly (hopefully) providing energy to “the grid” to reduce our reliance on dirty burned fuels.

      In the end, it’s all essentially solar. But the cold fusion reactor is like putting the sun in a coffee pot. Fossil fuels are akin to capturing the energy that the sun released thousands (millions?) of years ago.

      I’d love to find and invest in the successful company that is bringing cold fusion to commercial success – except that it may eclipse its own market in short order.

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      December 2, 2019

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