Last yearÃ¢Â€Â™s 84% surgeÃ‚Â in Apple (NASDAQ:) shares was a surprise, even for many of Wall StreetÃ¢Â€Â™s biggest bulls. By comparison, the S&P 500 was up 30% and the Dow Jones Industrial Average clocked an increase of 22%. AppleÃ¢Â€Â™s gain was on par with the best-performing tech IPO for the year, Zoom Video Communications (NASDAQ:).
Now the market cap for the tech giant stands at $1.3 trillion. Alphabet (NASDAQ:, NASDAQ:), on the other hand, is at $923 billion and Microsoft (NASDAQ:) trades at $1.2 trillion. By the way, Apple had a much better year-to-date performance than both of these companies.
Ã¢Â€ÂœThe qualities of companies that are likely to thrive have a business model that stands the test of time,Ã¢Â€Â said Robert R. Johnson, Professor of Finance at the Heider College of Business at , in an email interview with InvestorPlace.com. Ã¢Â€ÂœThat is, firms with durable competitive advantages. Warren Buffett refers to these as economic moats Ã¢Â€Â” using imagery from the Middle Ages. Apple is an example of a stock with multiple moats relating to network effects, intangible assets (its brand name), and switching costs.Ã¢Â€Â
This analysis is certainly spot on. But for 2019, Apple also benefited from some major catalysts. There was, for example, the easing of monetary policy from the Federal Reserve. This not only pumped more liquidity into the system Ã¢Â€Â” in which a large amount went into equities Ã¢Â€Â” but also helped to stabilize the economy. Next, there was the thawing of the U.S.-China trade war. CEO Tim Cook was also savvy in how he found ways to navigate the tricky politics.
In terms of the fundamentals of the business, Apple has been successful in transitioning to services, such as with Apple Pay, iTunes, iCloud, Apple Music and so on. This has provided for more