It's official. Apple, the world's biggest company by market cap, will be joining the Dow 30 to become a major component in what forms the DJIA.  At any one time, the Dow Jones Industrial Average always holds 30 stocks.  If Apple is coming in, someone has to be kicked out.  In this case, that would be AT&T (T).  The swap in the index will be effective on March 19.

This is significant, and will likely do the index some good, as the future of AAPL is still very bullish, as opposed to AT&T, which currently holds a Zacks Rank #3 (Hold).  There shouldn't be much of a void in the Dow's representation of the Telecommunications sector when AT&T leaves though, since Verizon (VZ) will remain in the benchmark. 

As the Dow Jones is a price weighted index, stocks with a high price have much more of an influence on the index, with lower priced stocks having a small impact on the performance of the DJIA.  Before Apple's 7-1 stock split in June, it simply would not have been possible for the company to be among the Dow 30, since it would command too much weight with a stock price well over $600.

AAPL is currently trading for around $127, which is still a lot of influence over the index.  The 30 stocks which comprise the Dow have an average price of about $86.  This means that Apple's stock price is over 47% higher than the average stock in the Dow 30.  The fact that Apple's future is very optimistic will only help it command even more of a voice in the index.

AAPL is currently a Zacks Rank #2 (Buy).  Although it is the world's biggest company, it has an exceedingly good PEG of 1.08, suggesting that its growth is exceedingly good for the price it is trading for.  The fact that the Earnings ESP is positive complements the Zacks Rank nicely, as the favorable rank and ESP indicate that it is likely that AAPL will surprise on earnings when it reports them on 4/22/15.

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APPLE INC (AAPL): Free Stock Analysis Report
 
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