The COVID-19 crisis has been one of the most disruptive events in recent human history. Yet, when it comes to the stock market, few investors can complain about their portfolios’ performance.
March 11, 2021 marked the one-year anniversary of the global pandemic, as declared by the World Health Organization. During the period, the S&P 500 climbed an impressive 35%, despite the odds. Apple performed more than twice as strongly: 78% in the past 12 months, dividends included.
Some interest facts
Here are a few fun facts about Apple stock’s performance during the pandemic:
- Apple vs. Nasdaq: While Apple has topped the returns of the S&P 500 by a long stretch, the stock’s outperformance vs. the Nasdaq has been a bit more muted: 10 percentage points. Within the tech-heavy index, other high-growth names helped to push the group higher, including top 10 holdings Tesla and PayPal.
- Apple vs. Dow: Apple did much better than the Dow Jones index, which is dominated by old-economy stocks like Boeing and Honeywell. The Cupertino company’s shares beat the Dow by about 40 percentage points.
- A few old-economy outliers: Although Apple did much better than the Dow, two top 10 holdings topped its performance during the pandemic: Goldman Sachs and Caterpillar.
- Best in a decade: 2020 was a strong year of returns for Apple, but only its 10th best in history. Using March 11 as the last day of each year, the pandemic would have been Apple’s 6th best 12-month period ever, and the best since 2010.
What drove Apple’s performance
A few factors can be credited for the strong performance of Apple’s stock during the pandemic year. The first were the new consumption trends of the stay-at-home economy.
Although COVID-19 disrupted supply chains and shut down physical Apple stores, demand for tech devices and services increased substantially. With the help of the online channel, Apple met this demand as best as it could, managing to grow revenues robustly.
Also, fiscal stimulus in the US may have favored companies that rely on discretionary spending. As checks were distributed to residents across the income groups, from lower to higher, many chose (or were able) to spend their money on items like smartphones and laptop computers.
Lastly, Apple finally joined the 5G party, when it launched its iPhone 12, in October 2020. There is evidence that this could be a strong upgrade cycle for the Cupertino company, with one analyst believing that about 40% of the global installed base is overdue for a new iPhone.
Just for fun, I asked Twitter followers if they knew which stock in the Dow Jones index had outperformed Apple during the pandemic year. Let’s see their responses:
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(Disclaimers: the author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)