Apple, The Largest Company in the TSP Worth $1 Trillion
Apple recently surpassed the $1 trillion in market capitalization making it the first company to do so in the US. This means that Apple’s price of the stock multiplied by the number of shares in existence is over $1 trillion. In short, that is the amount that one would need to buy 100% of their stock.
There are more than 5 billion Apple shares in the market, each being priced over $200. Over the years, the company’s profits have been increasing thanks to the steady rise in stock prices. The current net worth makes Apple the largest company in the Thrift Saving Plan.
Apple is the largest component in the TSP’s C Fund, currently accounting for approximately 4.2 percent of the 500-company fund.
Globally, Apple is the second publicly-traded company to reach the $1 trillion mark. China’s state-controlled oil company, PetroChina, briefly became the first trillion-dollar business across the globe then it became a public company in the year 2007.
The reason why PetroChina held the position for such a brief period is that it was dramatically overvalued, trading more than 60 times its net income. The following year, PetroChina had dropped down to about $250 billion in market capitalization. The company has never really recovered anywhere near the $1 trillion mark. This is because it never had anywhere near the business fundamentals to justify its high valuation.
On the other hand, Apple reached the $1 trillion fair and square. Over the past 12 months, the company made 56 billion dollars in net income, and its price-to-earnings ratio is less than 20.
For almost all companies in the C Fund, the average price-to-earnings ratio is currently over 24. Based on that metric, this means that Apple is trading at a mildly below average valuation.
Investors have a realistic view of the company. The phone sales may be saturated all over the world, but Apple has large growth potential in its services segment as it gets a share of the growing amount of apps and media on its device network.
The Top 5 in the C-Fund
The top 5 largest components of the C Fund, collectively account for a whopping 15 percent of the 500-company C Fund.
All of the top 5 companies are tech companies. They include Apple, Microsoft, Google, Amazon, and Facebook.
The main reason why very few companies account for such a large chunk of the C Fund is that the fund is weighted by market capitalization. The C Fund has the most Money invested in the biggest companies.
Currently, Amazon has a market cap of more than $900 billion. Both Microsoft’s and Google’s market cap are over $800 billion while Facebook’s market cap is over $500 billion.
A couple of these companies are within striking distance of joining Apple over the $1 trillion mark. All the five companies are trading at higher price-to-stock ratios than Apple. Amazon’s price-to-earnings ratio is over 150 while Facebook’s is over 24, Microsoft’s is over 27, and Google’s is over 150.
