Cult Stocks: Apple of the Market's Eye

This post appeared earlier Thursday on RealMoney. Click here for a free trial, and enjoy incisive commentary all day, every day.

It's not hard to understand the unwavering loyalty Apple(AAPL) shareholders feel for their beloved company. If you have owned shares in Apple for any meaningful period over the past 10 years, that loyalty has been rewarded.

Just look at the following chart comparing Apple's returns with those of the S&P 500 and Nasdaq over the years (the numbers are rounded for simplicity):

Apple Versus the S&P 500 and Nasdaq Source: Yahoo! Finance

According to Value Line, Apple's five-year total return has been 546%. Those kinds of numbers don't just breed loyalty, but outright allegiance to a company. Apple can do no wrong, claim its adherents.

Those Were the Good Ole Days

Thus far, Apple continues to deliver on expectations. The iPhone remains the most popular and fastest-growing mobile handset, having easily outpaced Research in Motion's(RIMM) successful Blackberry line. The iPad, released against a wave of criticism, quickly silenced those who thought that this "supersized iPhone" would not garner mass appeal. I have an iPhone and an iPad, and they offer me two completely different functions.

Unfortunately, I don't own shares in Apple, but I would welcome the chance, in this particular case. My aversion to tech stocks remains intact -- intense competition and rapid obsolescence make it difficult to predict the future of many tech stocks beyond several years.

Apple, dare I say, may be different. Realizing that the best share gains are forever gone (Apple would have a market cap approaching nearly $2 trillion if the next five-year total return were similar to that of the last five), the company so far remains ahead of the curve. In a very short period of time, Apple has gained the upper hand in the tablet computer market, leaving everyone from Dell(DELL) to Hewlett Packard(HPQ) trying to play catch up. And I don't we have even scratched the surface in terms of what a tablet computer can do.