Everyone seems to have an opinion of Apple. Their products are written and talked about on almost every street corner in the world. Apple’s stock is talked about Ad nauseum by every financial media outlet and there seems to be no end to the analysis, speculation, and prognostications that happen on a daily basis.
And yet by my estimation, all the hype this company gets has not taken its stock price to a point where it is overvalued. In fact, I think that owning AAPL right now at its price of $125.32 on 4/3/2015 might be a safer play than putting your money in a bank CD.
You Get Solid Growth
Apple makes more money than any company in the history of the world. And yet, investors are forever wary of their future as they view Apple as a one trick pony with a few profitable side businesses. Yes, the iPhone does comprise more than 60% of Apple’s profits but the ecosystem built around the phone is what makes that product safe. Expansion into China has been increasingly successful (much greater than the “experts” forecast) and Apple is once again growing, despite their mammoth size. competitors are out there but they have been relegated to the low end of the market where Apple chooses not to even compete.
Apples’s ecosystem is their ace in the hole and what many investors overlook. A new, much improved, Apple TV box will likely come out this year along with a new Beats branded music streaming service. Apple Pay will gain steam as more and more retailers are forced to upgrade their payment systems due to pressure from the credit card companies later in the year. And of course there is the Apple Watch which will make every new iPhone a must if you want to wear one of the watches. All these things contribute to the stickiness of the ecosystem and the inevitable growth of the company.
The Stock’s Safety
The massive buyback program that has been implemented and will undoubtedly be expanded this year (earnings call on 4/27/2015 will have news about this) helps to prop this stock up in any times of uncertainty. Investors can only bid this stock down marginally before Apple swoops in to bid it back up or at least stabilize the price. A dividend of 1.5% that will probably be raised slightly this year also helps to minimize risk.
You also have the best balance sheet in the history of the world with Apple’s cash hoard of over $150 billion dollars. Much of that money is held overseas which unfortunately forces Apple to borrow money to fund those buybacks and dividends but with interest rates at all time lows, the borrowing comes at a small price. Any “tax holiday” that politicians might agree to in the next year or two would be a huge boon to Apple and instantly raise the stock price due to the saved taxes in bringing that money back to The United States.
Right now it seems, Apple is one of the safest growth stock to own. Its not a high growth stock but for anyone looking for some security along with their growth, it can’t be beaten. Things could change of course in the future as new iPhones and new products may or may not continue to be such massive hits. But until that happens, putting money in AAPL is probably safer than sticking it under your mattress.
*Please do not take the advice written on this website of any stock without first doing your own thorough research and then consulting your paid professional financial planner or stock broker. This website is for entertainment purposes only and cannot be held liable for any investment decisions you make.