Apple Inc. (NASDAQ:AAPL)‘s addition to the Dow Jones Industrial Average is perhaps the biggest and most important addition that Dow has had in recent years. Today is Apple’s first day in the index and it would be interesting to see how they benefit from each other. RBS Capital Markets Anlyst, Amit Daryanani was on CNBC’s Tech Bet to discuss what this change would mean to those who invest in Apple Inc.
“I’m not sure if it would be any different than what Tim Cook has had to do in the past. Near to what might people want to see what he needs to do to keep investors happy is: continue traction success with iPhone 6 Plus launch, capital allocation which everyone is expecting will happen sometime in the month of April, and then the Apple Watch dynamics. In near terms these are three factors that people will focus on. Longer term – the question will always be: can Apple innovating? Can Apple keep coming up with the next iPhone -like product to move their revenue stream higher,” Daryanani said.
As Daryanani noted – for Apple Inc. (NASDAQ:AAPL) joining the Dow is definitely a good sign but it more of an emotional thing only. It might not change the fundamental way people look at the company. On the other hand the Dow can benefit more from Apple’s inclusion. Dow is a price-weighted index. Regardless of what company market value is they look at the price of it’s stick. So, though Apple would begin as 5th highest ranked stock in the Dow its sheer volatility and its size, can still drag the Dow higher.
“It makes a logical sense to have the biggest company in the world to be a part of the Dow and it makes sense to have more tech representation. At least something that I would call more new-tech versus IBM and Cisco and others that they have had – which are old-tech. […]. Apple has been fairly volatile stock historically, does it increase the volatility of the broader index? Given by our estimation Apple is going to be something like 5% of the index right now,” Daryanani said.
Today is the first day for Apple Inc. (NASDAQ:AAPL) in the Dow and it is definitely going to be interesting to watch Apple can do to the Dow Jones Industrial Average overall. Apple does trade better than any other stock present on the index – so can it work as goodluck charm for the Dow Jones Industrial Average?
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