Could Apple finally land in the Dow?August 1, 2012: 10:40 AM ET
There's always a rumor going around about Apple (AAPL). For tech geeks. the chatter is usually about when the next iPhone or iPad is coming out and what new features those products will have? But for Wall Street traders, the speculation is often about whether Apple may finally split its stock ... and make itself a more likely candidate to be included in the exclusive club of 30 known as the Dow Jones Industrial Average.
An analyst from Bernstein reignited the chatter with a report Tuesday suggesting Apple could split and then be invited to pass the Dow's velvet rope. But I've argued for years that Apple belongs in the Dow. It's the world's most valuable company.
And it is arguably more relevant than any of the other techs already in the Dow: be it strong companies like IBM (IBM), Microsoft (MSFT) and Intel (INTC) or struggling Cisco Systems (CSCO) and woeful Hewlett-Packard (HPQ). Dropping HP in favor of Apple could make sense -- except for the fact that the Dow is a price-weighted average and not a market cap-weighted index like the S&P 500 or the Nasdaq Composite.
Apple already has a big influence on the daily direction of the Nasdaq and S&P 500 because of its gargantuan market value of nearly $575 billion. But Apple would really skew the Dow if it were added with a stock price north of $600. Hence, calls for a stock split.
If Apple were to say, split its shares 6-1, that would knock the price down to a little higher than $100. That would still make Apple one of the more expensive stocks in the Dow on a per share basis. But it could be tolerable to the people in charge of running the Dow.
McDonald's (MCD), Caterpillar (CAT), Exxon Mobil (XOM), Coca-Cola (KO) and 3M (MMM) trade for more than $80 a share. Chevron's (CVX) stock price is above $100. And IBM trades for nearly $200. Watch my Buzz video below for more about Apple stock split rumors and its upcoming dividend.