Is It Too Late to Buy Apple Stock? The Motley Fool
The company boasts nearly $100 billion of net cash and generates substantial free cash flow — the cold, hard cash left over after regular operations and business reinvestment covered. Trailing-12-month free cash flow was $64 billion, easily justifying Apple’s nearly trillion-dollar market capitalization. Over the long-term investors can expect strength in Apple’s services to offset the slowdown in hardware.
While that’s an extraordinary achievement, it’s important to look forward when evaluating a stock. This will require assessing the company’s prospects and valuation before deciding whether you should buy, sell, or hold on to your Apple shares. For next year, analysts limefx broker review forecast revenue growth will decelerate to 5%, while profits increases could slow to 9% if the predictions prove correct. This comes at a time when the multiple has reached a multi-year high and could point to multiple compressions in the near future.
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- When you’re a three-trillion company, that’s not a small amount of market cap disappearing.
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- Typically, unit sales surge in the year when new iPhone handsets are released and are slower in the off-cycle years when “S” versions are launched.
- The Historical Cash Flow Growth is the longer-term (3-5 year annualized) growth rate of the cash flow change.
In a negative sign, Apple stock has been trading below its 50-day moving average line. Also, its relative strength line has been drooping lately as it underperforms the S&P 500. In January 2022, Apple briefly hit a market value of $3 trillion, becoming the first company to reach that milestone.
Should You Really Buy Apple Stock?
Apple’s third quarter revenue was $83 billion, up 2% year over year. Diluted earnings per share (EPS), on the other hand, fell year frequently asked questions for forex over year by 7.7% to $1.20. Despite slowing earnings growth, both revenue and EPS were firmly above Wall Street’s estimates.
It wouldn’t be surprising to see combined services and wearables revenue account for a third of the tech giant’s revenue in fiscal 2020. That’s a large enough share of revenue to have a material impact on Apple’s overall business given the two segment’s staggering growth rates. Perhaps one of the biggest concerns of investors in tech stocks, particularly those that sell tech hardware, is how the coronavirus pandemic will affect global supply chains and shipments.
Is It Time to Buy the Apple Downgrade Dip?
Sales of Macs, iPads, and wearables were down year over year, while demand for Apple’s flagship iPhone remained strong. Despite the possibility of an economic recession, third quarter iPhone sales rose year over year by 2.8% to $40.7 billion. Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data. The more compelling valuation on mighty Apple has caught the attention of long-time tech analyst Jim Suva at Citi. But just like other large companies, the volatile global economic backdrop has hit Apple in the form of slowing iPhone and accessory sales, as well as production delays out of COVID-19-stricken China.
Stocks to Add to Your Portfolio in a Market Pullback
To answer that question, let’s dig into the company’s prospects and valuation to determine if long-term investors should buy right now. Like clockwork, Apple announces its newest lineup of iPhones almost every September, with sales remaining consistent throughout the year. However, Apple has made a significant push into services over the last few years. The introduction of apps such as its streaming service Apple TV+, Music, Fitness+, and iCloud has pushed consumers further into the company’s ecosystem of products and boosted revenue. The iPhone titan has proven time and time again that its business is consistent and able to weather most storms.
Price Target and Rating
That’s part of a broader industry trend that has affected the overall smartphone market. For the first nine months of fiscal 2023, which ended on July 1, iPhone sales accounted for 53% of Apple’s sales. Today’s Apple also does not look like a “growth stock.” For one, it has become the largest holding of Warren Buffett’s Berkshire Hathaway. Although Buffett has turned over more investment decisions to others in his company, such a position arguably points to an endorsement as a value stock.
Billion Reasons to Buy Apple Stock Hand Over Fist Now and Never Sell
So while inflation is easing, consumers are still feeling the pinch and will probably put off upgrading to the next iPhone just a bit longer. However, once the economy rebounds, as it inevitably will, the pent-up demand for iPhones is likely to drive the stock higher. Added Suva, “Apple’s current market value does not reflect new product category launches. This will change with the launch of the new AR/VR headset in 2023 and foldables in 2024.” The decline comes despite Apple often being viewed as a safe-haven investment, as it boasts a formidable balance sheet flush with cash and a steady stream of repeatable services income. If you’re interested in buying Apple stock, the first thing to do is to research the company’s history and familiarize yourself with its current financial position. While individual shares are one way to invest in Apple, they’re not your only option.
Noted Apple analyst Katy Huberty estimates that an AR/VR device could bring Apple $29 billion in revenue by 2026. At the end of the most recent quarter, the company had $193 billion in cash on hand. Even when you account for the company’s debt, tradeallcrypto broker review: the way to success Apple still had $73 billion left over. This broad-based growth highlights the resilience of Apple’s business model during a time when many businesses are struggling. Here’s why investors might want to take a closer look at Apple stock.
That segment includes its Apple Music and Apple TV+ streaming services, which have grown to over 825 million paid subscriptions worldwide, and rose by 165 million in the last year. In its most recently completed quarter, which ended March 26, revenues from Apple’s services segment totaled $19.8 billion. Apple (AAPL -1.03%) is one of the best-known companies in the world, and has made plenty of shareholders wealthier over the past several decades. Its demonstrated ability to repeatedly create innovative tech products and services keeps it top of mind with a broad swath of consumers. Apple’s share price drop, mixed with the general pessimism in the market right now, has left some investors wondering if Apple’s stock is still a buy.
Apple also has a strong balance sheet — with cash and marketable securities worth $179 billion and total debt of $120 billion. Investors, however, are worried about the revenue performance of the services segment, which was lower than consensus analyst estimates of $19.7 billion. While the macro headwinds remain a challenge, this high-margin and recurring-revenue business is poised to be a major growth driver in the coming years.