Two stocks have driven the Dow Jones Industrial Average (DJIA) to near record levels so far this year. They are Apple Inc. (NASDAQ: AAPL) and Walt Disney Co. (NYSE: DIS). That the two companies have carried the Dow on their shoulders makes sense. Each posted spectacular results in their most recently reported quarters.
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The year-to-date improvement in the DJIA is 2.6%. Apple shares have risen 17.8%, an impressive move for the largest company in the United States as measured by market cap. Disney’s stock is up 17.0% over the same period.
Apple’s success is based primarily of two factors. The first is spectacular sales of the iPhone. The other is the growth of sales in Greater China. Apple management has said that China is critical to the company’s future. In its most recently reported quarter, iPhone sales hit 61.2 million. This drove revenue of $40.3 billion, against Apple’s total for the quarter, which was $58 billion. iPhone revenue rose 27% over the same quarter in the previous year. Greater China sales rose 71% for the same period to $16.8 billion.
Disney’s revenue in the last quarter rose 7% from the same quarter a year ago to $12.5 billion. Net income did better, up 10% to $2.1 billion. Just as important as the improvement across the entire company was that three of Disney’s four operating divisions had improved revenue. Its largest division, Media Networks, posted a 13% growth to $5.8 billion.
Disney can make the argument that among the largest diversified entertainment companies in America, it posted the best quarter last year, based on share price. Viacom Inc.’s (NYSE: VIAB) shares are down 17% year to date. Time Warner Inc.’s (NYSE: TWX) are up less than 1% for the same period.
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Disney and Apple have had to offset very poor performances by several other DJIA component stocks that have dragged the index down. This is particularly the case with American Express Co. (NYSE: AXP), with its share price down 13%.
Since no other stocks in the DJIA have indicated that they will have tremendous years financially, if the index rises more, Apple and Disney likely still will be the engines.
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