Apple (NASDAQ:AAPL) has reached another market-cap milestone: a valuation of $3 trillion.
The amount is hard to conceptualize, but a recent New York Times article laid it out plainly:
“Combine Walmart, Disney, Netflix, Nike, Exxon Mobil, Coca-Cola, Comcast, Morgan Stanley, McDonald’s, AT&T, Goldman Sachs, Boeing, IBM and Ford.
“Apple is still worth more.
“… a $3 trillion valuation is striking. It is worth more than the value of all of the world’s cryptocurrencies. It is roughly equal to the gross domestic product of Britain or India. And it is equivalent to about six JPMorgan Chases, the biggest American bank, or 30 General Electrics.
“Apple now accounts for nearly 7 percent of the total value of the S&P 500, breaking IBM’s record of 6.4 percent in 1984, according to Howard Silverblatt, an analyst who tracks valuations at S&P Dow Jones Indices. Apple alone is about 3.3 percent of the value of all global stock markets, he said.”
Apple’s rapid valuation growth has been breathtaking; while it took the company 42 years to reach the $1 trillion mark, its valuation doubled to $2 trillion only two years afterward — and then breached $3 trillion 16 months and change after that.
However, I do not see the stock hitting $4 trillion any time soon. Apple has shown the way, but it will now pass the growth baton to smaller tech companies.
Back in November, I shared with you my 5 Tech Stocks for 2022 report, and now that the new year is in full swing, I’ll re-emphasize the two smallest stocks from that report:
Infinera Corp. (INFN)
Huawei Technologies is certainly feeling the heat, considering the next stock on my list is also a direct competitor.
The first and most important fact to know about Infinera (NASDAQ:INFN), a Silicon Valley-based optical equipment manufacturer, is that it operates in a segment of the telecom equipment market that Huawei has dominated for several years.
Infinera’s No. 2 spot in the U.S. is the second-most important fact to know about this company. Here’s why…
In a world where no one cared about the “Made in China” aspect of product sourcing, Infinera was a solid but smallish player. Its market cap, as of mid-2021, is just $1.9 billion — or less than one-fourth the size of Ciena (NYSE:CIEN), a Maryland-based, industry-leading provider of hardware, software and services that optimize the performance and/or efficiency of communications networks.
But in the new world of “Not Made in China,” or NMIC as I call it, Infinera has the potential to gain a much higher profile. Here in the States, Infinera could become part of a de facto duopoly with Ciena, in which it becomes the “second” or “redundant” supplier.
No major companies want to rely on a single supplier of critical equipment if they can avoid it. So, if U.S. telecoms are in the process of giving Huawei the boot, they will likely look to access one or more replacements — and Infinera is an obvious choice.
Infinera is one of only two companies that can provide next-generation 800G solutions, which is a state-of-the-art technology that can process and transport more capacity than has been previously possible over a single optical channel or wavelength — up to 800 billion bits per second. In fact, 800G quadruples the wavelength capacity of typical networks.
Capacity enhancements of this magnitude are essential for any telecom carrier or other network operator that hopes to accommodate the soaring volumes of data that 5G technology will send through networks.
As Infinera ramps up its 800G product deliveries, its gross margins and earnings should grow significantly.
Sabre Corp. (SABR)
The travel industry has been flying through some “rough chop” over the last two years. But the long-running Covid-19 pandemic merely adds to the power of the ultimate travel recovery.
Therefore, rather than walk away from this sector, I recommend looking to Sabre (NASDAQ:SABR), one of the travel industry’s “Big 3” global distributions systems (GDS). (Amadeus IT Group (OTCMKTS:AMADY) and Travelport are the other two. Together, these three companies make up 97% of all travel bookings worldwide.)
A new travel boom may already be underway… and I believe it has the potential to power travel-related stocks to surprisingly large gains.
In the case of Sabre, more than 400 airlines and one million hotels use the Sabre system to process travel bookings. The company’s client list is a “who’s who” of the travel industry, including Kayak, Cheapflights, TripAdvisor (NASDAQ:TRIP), HiltonHotels, Marriott International (NASDAQ:MAR) and many more.
Sabre generates its revenues from the volume of transactions it processes, not the dollar value of those transactions. So, when travel activity increases, Sabre’s revenues also increase. Therefore, when the Covid-19 pandemic torpedoed travel activity, Sabre’s revenues tumbled. The company’s second-quarter 2020 revenues collapsed more than 90% year-over-year. Not surprisingly, Sabre’s share price also collapsed.
But the aforementioned vicious cycle is becoming a virtuous cycle of rising travel activity… and rising Sabre revenues. And this favorable trend will continue to strengthen in 2022 and beyond.
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On the date of publication, Eric Fry did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Eric Fry is an award-winning stock picker with numerous “10-bagger” calls — in good markets AND bad. How? By finding potent global megatrends… before they take off. In fact, Eric has recommended 41 different 1,000%+ stock market winners in his career. Plus, he beat 650 of the world’s most famous investors (including Bill Ackman and David Einhorn) in a contest. And today he’s revealing his next potential 1,000% winner for free, right here.