Apple (AAPL) is a technology company like no other. Founded by Steve Jobs, arguably one of the greatest tech entrepreneurs in the post-war era, Apple inc has come to symbolise the epitome of innovation and fashionable technology. It has been pioneering consumer smartphones since 2009.
Is Apple (AAPL:US) a good investment in the long term?
Like the IBM of old, Apple is now a ‘must-have’ stock for investors. When even Warren Buffett holds 907 million shares of Apple (about 5.6% of the company), no portfolio manager will be sacked for buying Apple shares. More importantly, Apple’s share performance has provided ample evidence that it is a really good stock to own over the long term.
In 2008, the tech stock was trading at a low of $3 (post-split, most recently done in 2020 4-for-1). Now, it is hovering at $150 per share. That’s about 50x in 15 years. Very few other large-cap stocks manage to generate a fraction of that return over the same period.
As a result of its consistent share price rally, Apple is now the most valuable company on earth – with a market capitalisation of $2.5 trillion dollars. With so much momentum behind it, the case for holding Apple is strong.
The best time to buy any tech share is when the sector is under duress. For example, the tech industry is under increasing selling pressure of late (see our recent analysis of when to buy shares in Meta). Some contrarian plays – that is, buying at extreme fear – may be opening up.
Apple, on the other hand, saw its share price rose by more than 7 percent on the same day Amazon (AMZN) slumped by 10 percent. As a result, Apple’s current relative strength against other top tech stocks are widening. Have a look at the bottom chart comparing the QQQ ETF (Nasdaq 100 Index) against Apple. Apple is outperforming QQQ.
- Yes, buy only if you assume that Apple will continue to prosper in the months ahead, therefore translating into bigger profits and affirming its fundamental growth story.
- No, sell if you take a more negative view of the market. A recent covid-lockdown in Apple’s China factory may cause near-term supply disruption.
- Maybe, hold if you already owned Apple shares, taking a long-term view is imperative. Tactically, however, trimming some positions at the top of the range while buying some when prices are weak may be desirable.
Apple’s latest fourth-quarter revenue was around $90 billion. This takes Apple’s full-year revenue to a total of $394 billion (up 8 percent year on year). Earnings per share is about $6.11 (up 9 percent year on year). This is a set of phenomenal results. Only a handful of companies can manage to churn out so much profits year after year. Many tech shares have tanked this year because of lower earnings.
While Apple’s share price dropped initially upon this set of results, the price turned around and closed higher. This means that the market may not be that perturbed about the current tech route – and view Apple in a more neutral way.
In other words, it is possible that Apple’s share price is fully valued at current prices.
Apple’s share rocketed nearly 7.5 percent on the day it released its fourth-quarter results. The fact that prices surged suggests that investors are now slightly optimistic about the company’s near-term future. Sentiment about the company was negative in the third quarter as prices slid from $175 to $135.
Chartwise, Apple shares price has been trading in a range since the end of 2021. Prices peaked just a little above $180 earlier in the year; and established a floor at around $130. Current prices are about mid-way within this range.
So if you’re looking for a short-term trade now, I would not be overly aggressive in position sizing. A range-trading stock can go either way at any time, thus whipsawing buy or short positions.
Macro uncertainty will also weigh on the general market sentiment.
With no meaningful slowdown in Apple’s earnings predicted, analysts are sticking to their bullish forecasts.
According to the Financial Times, nearly all analysts are recommending a ‘Buy’ or ‘Outperform’ on Apple’s stock. More tellingly, there is no ‘Sell’ recommendation and only 1 ‘Underperform’. This suggests that Wall Street is highly – and uniformly – positive about this tech titan than any other stock in the sector.
A more negative way to look at this is that the stock is pricing a bullish outcome – which may or may not happen. Any shortfall may cause a sharp drop in Apple’s share price.
Source: Financial Times
Yes, if you buy low and sell high! However you can also lose money quickly. Look at Apple’s share price over the 12-month period: Massive upswings and deep consolidations. For investors that are biased towards the long side, watch to buy mostly on corrections.
You need to deal with probability too. Nobody gets it right every time. Sometimes you win, sometimes you lose. To win out in the long run, you have to cap your losses and max your gains.
Position-sized your trade in a way that even if prices move significantly against you the overall portfolio remains viable.
The biggest risk from trading Apple is that you are on the *wrong side* of the trend. When you realise this, abandon the trade as soon as possible. Do not hope that the market will turn in your favour soon – because it may not. Many traders use stop losses strictly to prevent a losing trade from ballooning. You should do so too.
Another risk comes from Apple’s price pattern. In other words, when Apple’s shares are not ‘trending’ sufficiently up or down, it becomes harder to exploit price movements because there is insufficient distance between entry and exit points.
The last point relates to high volatility. For example, Apple’s share price spiked up after the Fed meeting on July 31 but slumped the very next day when Trump announced new tariffs on Chinese goods. These volatility will cancel trade signals quickly potentially resulting in minor losses.
If you plan to trade Apple shares in the short term, you will need to stay attune to Apple’s day-to-day behaviour. Remember, you do not trade markets. Rather, you trade your beliefs and understanding about the market.
Price breakouts are very important, especially when accompanied with gaps. A gap occurs when today’s trading range is completely outside yesterday’s trading range. New highs after some time are also important because it can create upward drifts.
Paper trade for a few months. Work out if the stock is suitable to your trading strategy. Not all do. So select your universe carefully.
To buy shares in Apple (NASDAQ:AAPL), you need a trading or share dealing account. Follow these three steps if you want to buy shares in Apple from the UK:
- Decide if you want to trade Apple in the short term or invest in the long term
- Compare share dealing and trading accounts in our comparison tables
- Decide which account is right for you and open an account
The good news for potential Apple Inc. traders is that some UK stock brokers offer an international share dealing service. One thing to remember before signing up to a broker is not to rely solely on their headline trading fees. This is because of currency fees, which might not be initially apparent, and could be high, pushing up your dealing costs considerably. Also, if you are holding the shares in an stocks and shares ISA, our beloved HMRC do not allow foreign currencies to be held in them, resulting in your trading proceeds needing to be converted back into sterling. Some brokers offer a service whereby you are able to hold foreign currency in the account, which means there is less pressure to convert back into sterling each time you sell.
The answers to our frequently asked questions by people interested in buying Apple shares about Apple’s share price are automatically updated every 15 minutes.
The current Apple share price is $160.25
Apple’s share price has moved $1.32 or 0.83% today.
Yesterday, Apple’s share price closed at $160.25
There were 59,256,343 shares traded in Apple yesterday.
What is Apple’s market capitalisation (market cap)?
Apple has market cap of $2,535,465,885,000
Apple’s most recent daily high has been $160.34
Apple’s most recent daily low has been $157.85
The Apple share price 52 week high has been $179.61
The Apple share price 52 week high has been $124.17
Apple’s current earnings per share (EPS) is 5.89
What is Apple’s price-earnings ratio (PE)?
Apple’s current price earnings ratio (PE) is 27.23
