Is It Still Worth It to Buy Apple Stock? The Motley Fool

Perhaps the stickiest aspect of the iPhone is the integration of iOS across multiple devices. Ancillary products (including the iPad, Mac, Watch, and AirPods) lose significant functionality when paired with a smartphone other than the iPhone. Furthermore, if an iPhone user were to switch to an Android device, they would lose significant functionality with other iOS users. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people around the world achieve their financial goals through our investing services and financial advice. Our goal is to help every Canadian achieve financial freedom and make all levels of investors smarter, happier, and richer. This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor.

And margin rates can vary significantly across these different groups. So, when comparing one stock to another in a different industry, it’s best make relative comparisons to that stock’s respective industry values. They report next week and he expects their comments to be negative. In China, Huawei is gathering market share from Apple, while Beijing is saying, Don’t buy Apple phones. That’s why Apple phone production is shifting from China to India. That said, if share get crushed next week, he would be the first to buy them, because there’s an insatiable appetite for them.

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That was also the year that Apple’s iPhone sales peaked (which we don’t expect to be reached again until 2024). The high volume in 2015 provided for strong operating leverage (30.5% operating margin); however, the operating margin has since steadily declined. In reviewing the margin forecasts, the consensus expectation is for a much higher operating margin averaging 26.3%, some 60 basis points above ours. By way of comparison, Apple’s operating margin has not reached that level since 2018. As a result, consensus EPS for the next three years is $4.42, $4.65, and $4.89, which based on the current price results in forward P/E ratios of 29.6 times, 28.2 times, and 26.8 times.

  • All this offers visibility on future product revenue, and here, things are looking good.
  • Founded on April 1, 1976, by Steve Jobs and Steve Wozniak, it is now the leading producer of consumer electronics and an economy all of its own.
  • The ever popular one-page Snapshot reports are generated for virtually every single Zacks Ranked stock.

And, of course, the 4 week change helps put the 1 week change into context. The Price to Sales ratio or P/S is calculated as price divided by sales. After the P/E ratio, it’s one of the most common valuation metrics. The VGM Score are a complementary set of indicators to use alongside the Zacks Rank. It allows the user to better focus on the stocks that are the best fit for his or her personal trading style. For example, a regional bank would be classified in the Finance Sector.

It’s the king of reliability and consistent growth

The company offers you a track record of growth, with several important financial metrics that have increased over time. In the quarter, services revenue climbed 16%, reaching a record high. Services are higher margin than products — with a gross margin of about 70%, versus 36% for products — and that means they can be more profitable for Apple. You don’t buy an iPhone every day, but you may regularly pay for Apple services. We also suspect that many customers are holding on to their phones longer than before, as premium devices are more than good enough for today’s needs (web browsing, streaming, and social media).

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A strong weekly advance (especially when accompanied by increased volume) is a sought after metric for putting potential momentum stocks onto one’s radar. Others will look for a pullback on the week as a good entry point, assuming the longer-term price changes (4 week, 12 weeks, etc.) are strong. If a company’s net margin is 15%, for example, that means its net income (or profit) is 15 cents for every $1 of sales the company makes. A change in margin can reflect either a change in business conditions, or a company’s cost controls, or both. If a company’s expenses are growing faster than their sales, this will reduce their margins. But note, different industries have different margin rates that are considered good.

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To answer that question, let’s dig into the company’s prospects and valuation to determine if long-term investors should buy right now. Despite sluggish iPhone sales, Apple’s stock has risen by an astonishing 46% in 2023, easily besting the S&P 500’s 17.1%. Unfortunately, the stock’s sharp increase means Apple’s shares have become more expensive. The 52 Week Price Change displays the percentage price change over the most recently completed 52 weeks (260 trading days). The 4 Week Price Change displays the percentage price change for the most recently completed 4 weeks (20 trading days).

All this means that, even though Apple shares have gained this year, this top stock still has plenty of room to run — in the near term and over the long term. So it’s a great idea to buy the stock today, or hold if you’re already a shareholder, and benefit from the many chapters to come in this exciting story. As the largest firm in the world, Apple is prone to material competition. Consumer hardware is inherently prone to cutthroat competition as short-product cycles and customers hungry for ever-superior features make market leadership difficult to maintain.

Should You Really Buy Apple Stock?

The technique has proven to be very useful for finding positive surprises. It’s logical to try to monetize the success of the iPhone with digital products like services, including Alphabet’s multibillion-dollar annual payment to be the default search engine. But there are questions now arising about how much more this business can grow. Today, Apple’s overall growth is driven more by services and accessories like AirPods. Services revenue grew at a 19.8% compound rate over the last seven years, and accessories grew at a 19.1% rate over that time. He runs the investing group Ultimate Growth Investing which specializes in identifying high-potential opportunities across various sectors.

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