The Big Apple (NYSE: GE) (NYSE: XOM) (NASDAQ: AAPL) (NASDAQ: MSFT, BRK.A, GOOG)

NEW YORK - Apple today became the largest company in the world for a brief moment only to fall a hair behind Exxon Mobil. Apple has gained $50 billion of value during the year while Exxon has lost $15 billion this $65 billion swing has led to a new largest company.

Perhaps Apple has benefited from Exxon's heavy share buyback program. Exxon has bought back $166 billion of stock over its history which shrinks the company in size but gives individual owners a larger share in the company. Apple on the other hand has continued to issue stock and has not paid a dividend since Steve Jobs since Steve Jobs returned and as CEO in 1997 and the company has never bought back stock. Exxon has also paid hundreds of billions in dividends over the years. The Caveat is that if you owned Exxon Mobil for the last 10 years you would have been paid back in a hundred billions of dividends and a hundred billions in stock, so you did just fine.

Despite the incredible earnings power of Exxon Mobil, this is the first time that investors would probably have to think about guessing which company deserves to be valued higher strictly on the fundamentals. Exxon earned $10.7 billion in the last 3 months compared to Apple $7.3 billion. However Exxon has has spent $15 billion in the last 6 months on investments in new equipment while Apple has spent $3 billion. Exxon has a return on invested capital of 34% in the last year while Apple has a return on capital of an infinite amount. ROIC is calculated by taking equity less goodwill less certain intangibles less cash, short term investments and long term investments. Simply put Apple requires little or no capital to run its business.

Apple also grew its Q2 earnings by 100%. Despite their growth and tremendous economics the company trades at a very low PE and even a pretty cheap price to book. This is likely because the market is mis-pricing the stock very badly. Second the company does have some risk, being a technology company and it also has risk because of the health of Jobs. On the other hand Exxon faces risks because they operate in many countries where there can be political problems they also face risk of people using less oil because of technological advances.

Its hard to believe General Electric is so far behind on the list. The company founded by legendary investor Thomas Edison has seen its market capitalization sink to $165 billion. In 2001 the company had a market capitalization of $500 billion to Apple's $9 billion. The iconic maker from jet engines, to turbines, to washer and dryers to NBC Universal has seen its market capitalization shrivel due to its finance division. Microsoft which had a $600 billion valuation in 2000 has seen its market capitalization drop to $214 billion or nearly the difference between Apples market capitalization and Microsft's current value.

As time goes on it looks like Apple will push further and further ahead. General Electric is likely to mount a charge on Microsoft going forward. Perhaps Google and Berkshire Hathaway will also top the list in the not so distant future.