Should You Invest or Buy in Apple Stock? NASDAQ:AAPL

Apple’s price-to-earnings and price-to-free-cash-flow ratios are both 29, which falls on the pricier side compared to the company’s historical average. However, when viewed next to rival Microsoft, Apple is trading at a discount. The company’s stock has been up over 700% in the last decade alone. That phenomenal success has investors curious if they should buy Apple stock right now. To answer that question, let’s dig into the company’s prospects and valuation to determine if long-term investors should buy right now. Apple has new products on the way that could reverse its sales decline.

However, the trend may have changed after investors and analysts seem to agree that the worst is over for AAPL stock in 2016. In the June quarter, Apple’s services revenue increased 8.2% year over year to $21.21 billion. Services include the App Store, AppleCare, iCloud, Apple Pay, Apple Music, Apple TV+, Apple Arcade and other offerings.

Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. In addition, you should determine whether shares of AAPL are currently overvalued or undervalued.

Meanwhile, many investors might be wondering if AAPL stock is a buy right now. Apple is still one of the largest and best-known companies in the world. And many of its products dominate the market, from the iPhone to the iPad. But Apple does have some weaknesses that could affect it—and its stock price—in the coming years. Investors have several options placing orders with stocks that should be researched prior to selection.

Momentum Scorecard

Apple briefly became the world’s first $3 trillion company during intraday trading on Jan. 3, 2022. The iPhone maker also holds the distinction of being the world’s first company to reach $1 trillion and $2 trillion. Enterprise Value / Earnings Before Interest, Taxes, Depreciation and Amortization is a valuation metric used to measure a company’s value and is helpful in comparing one stock to another. The Growth Scorecard evaluates sales and earnings growth along with other important growth measures. This includes measuring aspects of the Income Statement, Statement of Cash Flows, the Balance Sheet, and more.

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Terms of Service apply. We’d like to share more about how we work and what drives our day-to-day business. The chart below shows the unit sales surge in mid-2014 and 2015 as a result of the iPhone 6 release.

• Altogether Apple seems to be a relatively risk-free investment in a long-term portfolio.
• Then there’s the uncertainty in China, which recently banned government officials from using iPhones.
• And many of its products dominate the market, from the iPhone to the iPad.

Wedgewood Partners, an investment management firm, published its fourth quarter 2022 investor letter – a copy of which can be downloaded here. A quarterly net increase of 5.2% has been recorded by the fund for the fourth quarter of 2022, below the S&P 500 Index’s 7.56% gain for the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

In general, a lower number or multiple is usually considered better that a higher one. Value investors will typically look for stocks with P/E ratios under 20, while growth investors and momentum investors are often willing to pay much more. Aside from using absolute numbers, however, you can also find value by comparing the P/E ratio to its relevant industry and its peers. Note; companies will typically sell for more than their book value in much the same way that a company will sell at a multiple of its earnings.

Tech giant Apple (AAPL -0.90%) is one of the largest corporations in the world, boasting a monster market cap of $2.7 trillion. It may be difficult to believe that the California-based company still has significant room to grow at these levels. For long-term, buy-and-hold investors, Apple could be a good addition to your portfolio. However, whether Apple is a solid investment choice depends upon your portfolio’s mix. Where other companies have to spend substantial amounts of money on advertising, Apple can spend far less, plowing the difference into development of new products and services.

Apple continues to look like a great long-term bet.

If a stock’s EPS consensus estimate is $1.10 now vs. $1.00 the week before, that will be reflected as a 10% change. If, on the other hand, it went from $1.00 to 90 cents, that would be a -10% change in the consensus estimate revision. The Projected Sales Growth (F1/F0) looks at the estimated growth rate for the current year.

That’s not an encouraging sign with the company’s lower growth outlook. Shares rose nearly seven percent after reporting stellar earnings last quarter. Investors applauded the fact that the main financial results are above analysts’ expectations. They may suffer some drops z-value definition again, but it is reasonable to suggest that the share price is heading back to its highs of around $128.00—and it is still reasonable to predict higher peaks. So, even with due caution and diligence, the verdict for where Apple stock is heading is a bullish one.

What is the bull case for Apple?

NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments. An online brokerage is your gateway to buying and selling stocks. In addition to enabling you to purchase Apple shares, online brokerage accounts also provide research, educational materials and account types to help you meet your investing goals. Apple has built a very successful services business that some investors may still not fully appreciate. Consider that in the company’s second quarter, Apple’s services revenue increased 17% year over year to an impressive $19.8 billion. Is Apple’s iPhone 15 so desirable to consumers that you’re better spending your money on the device instead of the company’s stock?

We shared that Apple’s mastery over its suppliers has assured tremendous supply visibility for the company. The company has become Taiwan Semiconductor’s (TSM) largest customer. Their relationship has continued to deepen as Apple leveraged TSMC’s advanced packaging technologies to develop its UltraFusion packaging https://1investing.in/ architecture. Nevertheless, AAPL is not immune to the tech bear market as a tech stock. However, we believe such opportunities have presented investors with a long-term perspective another fantastic opportunity to add AAPL stock at fair value. Apple is classified as a member of the information technology sector.

EPS is the amount of money each individual share of a company is worth, based on the company’s current profits. In addition to technology products, Apple has a growing services business (e.g., iCloud, AppleTV+, and Apple Music). The company’s streaming platforms, cloud solutions, and other services generate recurring revenue, helping offset some of the variability of product sales. Since 2016 Warren Buffett’s Berkshire Hathaway has held Apple shares in its portfolio. It now holds around 5.5% of Apple stock, which accounts for approximately 40% of Berkshire’s equity portfolio. This is greatly encouraging for potential investors, as Billionaire Buffett has an exemplary track record of investing in quality companies.

Pre-sales for the latest iPhone may seem strong, but its lower-tiered models are not selling as expected.

Apple is in several stock market indexes, including the Dow Jones Industrial Average and S&P 500 Index. As a result, index funds and exchange-traded funds (ETFs) that benchmark their returns against those indexes hold Apple stock. That gave it the funds to invest in growing its business and to return cash to shareholders through dividends and share repurchases. And all while maintaining one of the strongest financial profiles in the world. If you still need to open one, these are some of the best-rated brokers and trading platforms. If you haven’t placed a trade before, here’s our guide to six steps for buying stocks.

The easiest metric for understanding whether a stock is overvalued is the stock’s price-to-earnings ratio (P/E ratio). To sell your Apple stock, return to your online brokerage platform, enter the ticker symbol, the number of shares (or dollar value) you want to sell and select a sell order type. These generally have the same names and work similarly to the order types we covered above. It’s wise to periodically review your investment portfolio and its performance. Though it’s exciting to buy shares of an individual company, especially a big name like Apple, you should take a moment to do your due diligence.

Plus, sticky inflation and the potential for a recession is weighing on investor sentiment. With these points in mind, and with the company’s outlook, it makes sense for investors to ask themselves, “Is Apple a good investment, and should I buy Apple stock? Should you buy Apple just because these well-known investors have loaded up on the stock? However, when four multibillionaires with different investing styles all like the same stock, it should at minimum prompt retail investors to take a hard look at it. Get this delivered to your inbox, and more info about our products and services. Apple stock, one of the reliable overachievers of Wall Street, has lost more than 2.2% year-to-date.

Who Is Apple’s CEO?

Critics on social media derided the new product as “nerd goggles.” The Pro models also will sport design improvements such as a titanium frame, improved battery life and more memory. The top-of-the-line Pro Max model will include an upgraded camera with a periscope lens for greater optical zoom capability, analysts say. Cupertino, Calif.-based Apple plans to introduce its iPhone 15 lineup at a media event on Sept. 12.

At its current market price, we think the market is far overestimating the value of the company for long-term investors. While sentiment could certainly push the price to being even further overvalued in the short term, for long-term investors we think future returns will lag the broader equity market. Keep in mind, if your investment has increased in value, you may owe taxes on your profit.

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Some investors are exiting technology stocks right now in part because many of them aren’t profitable and won’t be for years to come. Apple (AAPL -0.90%) has been a fantastic long-term investment, but year to date the stock has fallen nearly 23%. The drop has come as investors worry about sky-high inflation and the Federal Reserve’s aggressive approach to bringing it back down by hiking the federal funds rate. The company’s installed base of active devices hit a record high in the quarter ending July 1, in every geographical segment. Apple’s services revenue set an all-time high during the quarter. No, the Oracle of Omaha didn’t add to Berkshire Hathaway’s stake in Apple during Q2.

However, Apple is reportedly developing its own Ajax generative AI model that could change that dynamic. Services have become an essential part of what the company does. The fact that these have growth potential represents a major pillar of strength for Apple stock. Cook may be onto something when he speaks of augmented reality (AR) and VR developments. To see proof of this, look no further than the “Pokémon Go” craze that has infested the world over the past few weeks.

In fact, AAPL stock is held in 356 exchange-traded funds (ETFs), and US ETFs hold 1.9bn shares of Apple. Between 2013 and 2020, Apple’s gross profit margin hovered around 38%. This, along with product price hikes and improved hardware profits, has pushed its gross profit margin above 43%. In 2020, Apple drew around 80% of its revenues from product sales and 20% from services. Apple is constantly innovating and will introduce new products during a special presentation in September. Sales and EPS growth continues to beat expectations, but supply chain problems and China’s COVID-19 lockdowns have caused supply headwinds.

Kuo explained that the Pro models are currently showing delivery wait times of more than four weeks, which suggests good demand. However, the iPhone 14 and 14 Plus have been available in retail stores from their launch dates, which “reflects lackluster demand.” Apple (AAPL -0.90%) is one of the most innovative companies to date. Investing in Apple has felt like a no-brainer as its consistently successful products seem to make the company unstoppable.