I’m a sucker for Apple products. Mac. iPhone 7. iPad. Apple Watch. Beats headphones. Apple TV. I’m a sucker for Apple’s marketing. I now want an iPhone X, complete with the latest whizz bang technology, and its eye watering $1829 price tag for the model with 256GB of storage. $1829!! Holy good night. I must admit to pausing for thought at the price point, something I’d never done before with an Apple product. But… I’ll still probably fork out the cash and get an iPhone X. Not that I need one. Which alone gives you some idea about Apple’s marketing influence, and its massive…
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I’m a sucker for Apple products.
Mac. iPhone 7. iPad. Apple Watch. Beats headphones. Apple TV.
I’m a sucker for Apple’s marketing.
I now want an iPhone X, complete with the latest whizz bang technology, and its eye watering $1829 price tag for the model with 256GB of storage.
$1829!! Holy good night.
I must admit to pausing for thought at the price point, something I’d never done before with an Apple product.
But… I’ll still probably fork out the cash and get an iPhone X.
Not that I need one.
Which alone gives you some idea about Apple’s marketing influence, and its massive pricing power.
By market capitalisation, no wonder Apple is the largest quoted company, weighing in at a whopping $US830 billion.
$US830 billion. In Aussie dollars, over $1 trillion. Holy good night.
More impressively, Apple’s share price has jumped 56% higher over the past 12 months. As an Apple shareholder, that makes the $1829 iPhone X price tag just a little more palatable for me.
Impressive as it is, and impressive as the iPhone X looks, my bet is the Apple share price will struggle from here.
By pure dint of its size, Apple’s growth rate from here simply must slow. While S&P Capital IQ analyst estimates expect profits to grow an impressive 20% from 2017 to 2018, after that, in 2019 and 2020, profits are forecast to grow at just 4% per year.
Eventually, the law of large numbers catches up to everyone. Even Apple.
It has already caught up to most of Australia’s largest companies.
Even the large ASX companies that are growing at a reasonable pace — companies like CSL Limited (ASX: CSL) and Amcor Limited (ASX: AMC) — are trading on lofty valuations. The law of large numbers will catch up to them, too.
Regular readers will know I think the S&P/ASX 200 Index will go nowhere fast over the next 12 months.
Unlike the US — which has fast growing large cap companies like Facebook, Google’s parent Alphabet and Visa — here in Australia we’ve got slim pickings when it comes to exciting, global, large-cap stocks.
That’s why I’m increasingly moving more of my portfolio towards smaller ASX companies.
I’m not talking the speculative end of the market — penny share mining stocks have long been a graveyard for many an investor — but fast growing Aussie technology stocks.
A case in point is software company GetSwift Ltd (ASX: GSW).
I was first alerted to the company by our Motley Fool contributor James Mickleboro, who said…
“GetSwift aims to streamline a company’s logistics through its innovative platform by optimising delivery routes, automating the dispatch process, and providing real-time tracking alerts. It now has customers in 66 countries and 566 cities, including CommBank, and has achieved this without a salesforce. In the second-quarter the platform handled a record 729,626 deliveries, up 46% on the prior quarter.”
The GetSwift share price was already on a roll, when yesterday it went absolutely ballistic, jumping as much as 35% higher on the day after it announced what James is calling a “game-changing” North American deal.
Having bought GetSwift shares at the beginning of August, I’ve already more than doubled my money in less than 6 weeks. And, I’m holding on for the ride, seeing how far this thing can run.
Truly great fortunes can be made buying small, fast growing companies.
As with any investing, there are risks. Deep pocketed competitors can take market share. Cash can be tight. Valuations may run too far ahead of the company’s prospects.
But, when it comes to small cap investing, there’s a few ways you can help put the odds in your favour…
1) Buy a portfolio of small cap companies. Not all will work out, and indeed some will bomb, but if you get a couple of big winners, those gains will completely outweigh the losers. A stock can gain 10,000% or more. The most it can ever go down is 100%.
2) Many people are quick to take profits. The truly big gains come when you let your winners run, and run and run. The CSL Limited (ASX: CSL) share price has gained over 15,000% in the last 22 years. Anyone who sold to lock in a 50% profit back in 1997 will be kicking themselves today.
3) Many founder-lead companies have great track records. Amazon.com and Jeff Bezos. Berkshire Hathaway and Warren Buffett. Microsoft and Bill Gates. Alphabet (Google) and Larry Page. TPG Telecom Ltd (ASX: TPM) and David Teoh. Fortescue Metals Group (ASX: FMG) and Andrew ‘Twiggy’ Forrest. Flight Centre Travel Group Ltd (ASX: FLT) and Graham ‘Screw’ Turner.
It’s probably no coincidence that the GetSwift CEO is 32 year old founder Joel Macdonald.
Of the companies mentioned above, Bruce Jackson has holdings in Apple, Facebook, Alphabet, Visa, GetSwift, Amazon, Berkshire Hathaway and Flight Centre. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.