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Sept. 30, 2019, 2:51 p.m. EDT

‘Apple a value stock?’ The Great Rotation takes a strange spin

Apple stock is found in both value and growth funds, one analyst points out

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By Andrea Riquier


Getty Images
An Apple retail store in New York City. Can this stock be bought low and sold high?

As the “Great Rotation” grips the U.S. stock market, more investors are turning to “value” stocks, or those that are considered comparatively underpriced or overlooked.

In the past couple of weeks, while the main U.S. stock indexes /zigman2/quotes/210599714/realtime SPX +0.47%   /zigman2/quotes/210598065/realtime DJIA +0.40%   /zigman2/quotes/210598365/realtime COMP +0.87%   have hovered near all time highs, investors have been selling so-called momentum stocks which have led the market up based on fast growing revenues, earnings or valuations, and buying stocks offering value compared to earnings or book value.

But the speedy reversal of fortune for value, amid a market increasingly dominated by passively-managed funds, is leading to some unexpected outcomes.

See also: It’s reflation that’s turning the ‘Great Rotation,’ these analysts say

As famed investor Laszlo Birinyi put it in a Tuesday note to clients, “Yes, Caterpillar /zigman2/quotes/203434128/composite CAT +0.21%   has done well as have the banks but the value index has been led by Apple. Apple a value stock?”

Birinyi was looking at the iShares S&P 500 Value ETF /zigman2/quotes/206097129/composite IVE +0.30%  , which has gained over 4.3% since the start of the month. Apple Inc. /zigman2/quotes/202934861/composite AAPL +1.45%   makes up 8.14% of that fund’s holdings, he noted.

Tim Quast, president of quantitative analytics firm ModernNetworks IR, told MarketWatch, “Apple is in 275 ETFs. They range from ultra-short-tech to Sharia to large-cap to covered call to value and growth both.”

Yes, Shariah: the Wahed FTSE USA Shariah ETF /zigman2/quotes/213260779/composite HLAL +0.91% , whose holdings can be found here .  

Still, it’s a bit jarring to think of a company with a roughly trillion-dollar market cap, one whose devices are in the hands of billions of people literally around the world, as one that investors might not be fully appreciating.

As Birinyi put it, “Somehow buying Apple while playing defense is hard to compute but we are just reporting not editorializing.”

Related: Stock-market investors’ appetite for ‘bond proxies’ is waning

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US : S&P US
3,386.15
+15.86 +0.47%
Volume: 1.73B
Feb. 19, 2020 5:05p
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29,348.03
+115.84 +0.40%
Volume: 242.65M
Feb. 19, 2020 5:05p
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/zigman2/quotes/210598365/realtime
US : U.S.: Nasdaq
9,817.18
+84.44 +0.87%
Volume: 2.29M
Feb. 19, 2020 5:16p
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/zigman2/quotes/203434128/composite
US : U.S.: NYSE
$ 136.86
+0.28 +0.21%
Volume: 2.13M
Feb. 19, 2020 4:10p
P/E Ratio
12.78
Dividend Yield
3.01%
Market Cap
$75.48 billion
Rev. per Employee
$526,173
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/zigman2/quotes/206097129/composite
US : U.S.: NYSE Arca
$ 131.33
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Volume: 509,785
Feb. 19, 2020 4:10p
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/zigman2/quotes/202934861/composite
US : U.S.: Nasdaq
$ 323.62
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Feb. 19, 2020 4:00p
P/E Ratio
25.56
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0.95%
Market Cap
$1395.78 billion
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$1.98M
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US : U.S.: Nasdaq
$ 28.54
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Feb. 19, 2020 4:15p
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Andrea Riquier reports on housing and banking from MarketWatch's New York newsroom. Follow her on Twitter @ARiquier.

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