It is a good day for Tesla [NASDAQ: TSLA] and Apple [NASDAQ:AAPL] investors. The two companies have done a stock split to become accessible to a wider investor base. Investor momentum in the two is being driven by the excitement around the stock split and the fact that they are both fundamentally strong companies. Tesla has turned profitable and continues to record strong revenue numbers.
Apple Inc [AAPL] too is on a growth trajectory and has made history by hitting a valuation of $2 trillion. So between these two companies, which one is a better hold?
Well, the two stocks are a good hold both for short-term and long-term investing. As such with enough resources, holding both presents a good opportunity for gains.
However, if one only has the resources to invest in one of the two stocks, AAPL would be a better hold. That’s because, it is a dominant player in its markets, with little possibility of being overtaken by any other company. For context, Apple dominates 50% of the smartwatch market.
The company’s core product, the iPhone is one of the fastest-selling smartphones in the market. Most importantly, the iPhone stands out for the margins it makes per phone. The company sells the phones at a premium and is the key reason behind Apple’s huge valuation. Going by the iPhone’s brand equity, it is unlikely to be dethroned by any other smartphone maker anytime soon.
On top of that, the company has been able to leverage the iPhone to sell a wide array of profitable products. Apple enjoys a near duopoly with Google in the Apps market. The Apple store is a major revenue driver for Apple.
This is evident in its recent tussle with Fortnite over the commissions that the company charges. Despite the high commissions it charges, the company has the market power to dictate terms as was seen in its ability to kick out Fortnite, a major gaming company from its platform.
Looking into the future, Apple stands to benefit from the upcoming 5G networks. 5G will unlock a new wave of applications for the iPhone, creating a new growth cycle for the company. This makes AAPL a viable stock to hold long-term.
Tesla has its strengths but its biggest risk is competition. As the large carmakers such as Toyota and Volkswagen enter the electric car space more aggressively, Tesla’s growth curve could flatten. Nonetheless, the company is investing heavily in R&D and will remain a major player in the electric car market going forward.