I have made the case that AAPL will likely not grow very rapidly over the coming years, not nearly enough to justify buying at these prices. But perhaps the best argument to sell AAPL is due to the more attractive opportunities elsewhere. I have already mentioned FB and GOOGL, both of which trade at lower earnings multiples in spite of materially faster growth rates.
But beyond mega-cap tech, the broader tech sector has experienced a crash that has created numerous buying opportunities. Now isn't the time to be buying AAPL and hoping for a best case scenario of 7% annual returns - it is instead time to be sifting through the tech rubble and stocks that can deliver multibagger returns over the next few years. Many tech stocks in my coverage are flashing buy signals and appear priced for phenomenal returns. AAPL may be a "feel good" stock due to the growing dividends and share repurchases, but those characteristics had more meaning when the stock was trading at 10x earnings than now when the stock trades at 28x earnings.
Investors counting on the same reasons driving the rising stock price in the past to work moving forward are likely to be disappointed. I rate shares a hold but heavily emphasize that better opportunities are elsewhere. M due to uncertainties over the timing and magnitude of the Fed's monetary policy tightening agenda, Apple will likely draw a rebound from Thursday's earnings call.
While lost revenues driven by COVID- and supply-chain-related disruptions are likely a given, the tech giant is expected to have set a new record for fiscal first quarter sales on strong holiday season demand, nonetheless. Recent observations of easing supply chain constraints across Apple's suppliers and manufacturing partners also signal improvements to the current year sales outlook, which bolsters investors' confidence in the stock. And the continued strength in demand for Apple's products and services will likely maintain the brand's pricing power to beat any persisting inflation pressures ahead. Apple Inc has relatively low volatility with skewness of 0.69 and kurtosis of 1.38. However, we advise all investors to independently investigate Apple Inc to ensure all accessible information is consistent with the expectations about its upside potential and future expected returns.
Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Apple's stock risk against market volatility during both bullying and bearish trends. The higher level of volatility that comes with bear markets can directly impact Apple's stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different stocks as prices fall. Rose 34% last year and has pulled back $10 this week from all-time highs due to the tech meltdown. Expected to give only 2-3% earnings growth, but it usually surprises.
Last year it suffered supply chain delays, but that should be a tailwind this year, including China. Services make up 19% of total sales and will grow a lot, and services offer much higher margins than sales. Apple also appears to be getting more Android customers to migrate to its ecosystem, noting that it saw strong double-digit growth in the number of people who switched in Q3.
This is significantly positive, as Apple has done a good job locking in users and better monetizing them with pricier upgrades, new products, and services. While continued revenue growth and solid margin expansion should drive Apple's profits, shareholder returns could be magnified by Apple's massive stock buyback program. For perspective, the company has bought back an average of 5% of its stock each year over the last five years. Apple Inc. designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide. The company serves consumers, and small and mid-sized businesses; and the education, enterprise, and government markets. It distributes third-party applications for its products through the App Store.
Is Aapl A Buy Or Sell The company also sells its products through its retail and online stores, and direct sales force; and third-party cellular network carriers, wholesalers, retailers, and resellers. Apple Inc. was incorporated in 1977 and is headquartered in Cupertino, California. Zacks' proprietary data indicates that Apple Inc. is currently rated as a Zacks Rank 1 and we are expecting an above average return from the AAPL shares relative to the market in the next few months. Its Value Score of F indicates it would be a bad pick for value investors. The financial health and growth prospects of AAPL, demonstrate its potential to underperform the market.
Recent price changes and earnings estimate revisions indicate this would not be a good stock for momentum investors with a Momentum Score of D. Some investors seek out stocks with the best percentage price change over the last 52 weeks, expecting that momentum to continue. Others look for those that have lagged the market, believing those are the ones ripe for the biggest increases to come.
Regardless of the many ways investors use this item, whether looking at a stock's price change, an index's return, or a portfolio manager's performance, this time-frame is a common judging metric in the financial industry. Apple Inc. is one of the very few companies that had successfully sensationalised the American stock market since its launch. Headquartered in Cupertino, California this technological behemoth was co-founded by Steve Jobs, Ronal Wayne and Steve Wozniak in 1976. The company was launched with a view to innovate the field of technology and aimed to create unrivalled products for the lovers of superior experience.
Its premium products include iPhones, iPads, Apple Watches, Apple cards, Macs, Apple News+, Apple Pay, and Apple TV+. This is a bundled plan comprising four major Apple services namely, Apple Music, Apple TV+, Apple Arcade, and iCloud. Customers get access to all four against low monthly charges.
Among all the advanced gadgets engineered by Apple Inc, iPhones have especially captured attention all around the world and is currently one of the highest selling smartphones. This company started its business with a single product Apple I, a computer designed and hand-built by Wozniak. To financially support this creation, Jobs sold his Volkswagen Microbus, and Wozniak sold his calculator HP-65. The hard work and sacrifices of the founding members paid off when Apple laid hold of the biggest stock market launch in history after Ford. It kept growing from both technological and financial aspects, and by the beginning of the 21st century, Steve Jobs had become the face of Apple.
After his demise, many have criticised the company's products for their lack of innovation, but its market has consistently retained its loyal customer base. Shares of Apple soared after reporting earnings which comfortably beat consensus estimates. There are a lot of reasons to like the stock - growing dividends, share repurchases, and lots of profits. Yet with the stock trading at 28x earnings, I question whether bullish arguments are driven by sentiment or rational thinking.
Investors should question why AAPL has invested so much into share repurchases even as the valuation continues to soar. With the net cash position down to $80 billion versus the current market cap of nearly $3 trillion, the stock faces new challenges as I expect earnings to be volatile exiting this period of peak iPhone sales. This is an incredible time to sell and reallocate in the tech sector. While earnings are the driving metric behind stock prices, there wouldn't be any earnings to calculate if there weren't any sales to begin with.
Like earnings, a higher growth rate is better than a lower growth rate. Seeing a company's projected sales growth instantly tells you what the outlook is for their products and services. As a point of reference, over the last 10 years, the median sales growth for the stocks in the S&P 500 was 14%. Of course, different industries will have different growth rates that are considered good. So be sure to compare a stock to its industry's growth rate when sizing up stocks from different groups. Without the GAMMA stocks, the aggregate index barely grew cash earnings at all.
Limit orders are a good tool for investors buying and selling smaller company stocks, which tend to experience wider spreads, depending on investor activity. They're also good for investing during periods of short-term stock market volatility or when stock price is more important than order fulfillment. DescriptionApple Inc. designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide. It also provides digital content stores and streaming services; AppleCare support services; and iCloud, a cloud service, which stores music, photos, contacts, calendars, mail, documents, and others. It sells and delivers third-party applications for its products through the App Store, Mac App Store, and Watch App Store. Apple Inc. has a collaboration with Google to develop COVID-19 tracking system for Android and iOS devices.
Apple Inc. was founded in 1977 and is headquartered in Cupertino, California. Paired with the stock's recent pullback in price, we're maintaining a buy rating with expectations for it to contest the $200-level within the next 12 months. While some are bracing for an aggressive dose of monetary policy tightening with an initial rate hike of up to 50 bps in March to rein in inflation, the Fed will likely tread lightly over the matter. Despite historical inflation, it's likely the Fed is "acutely aware of the risk around getting too aggressive" and making a policy mistake that could be detrimental to the economy. At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system.
Since 1988 it has more than doubled the S&P 500 with an average gain of +25.37% per year. These returns cover a period from January 1, 1988 through January 3, 2022. Zacks Rank stock-rating system returns are computed monthly based on the beginning of the month and end of the month Zacks Rank stock prices plus any dividends received during that particular month. A simple, equally-weighted average return of all Zacks Rank stocks is calculated to determine the monthly return. The monthly returns are then compounded to arrive at the annual return. Only Zacks Rank stocks included in Zacks hypothetical portfolios at the beginning of each month are included in the return calculations.
Zacks Ranks stocks can, and often do, change throughout the month. Certain Zacks Rank stocks for which no month-end price was available, pricing information was not collected, or for certain other reasons have been excluded from these return calculations. The Charles Schwab Corporation provides a full range of brokerage, banking and financial advisory services through its operating subsidiaries. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. , offers investment services and products, including Schwab brokerage accounts. Its banking subsidiary, Charles Schwab Bank, SSB , provides deposit and lending services and products. Access to Electronic Services may be limited or unavailable during periods of peak demand, market volatility, systems upgrade, maintenance, or for other reasons.
Its banking subsidiary, Charles Schwab Bank , provides deposit and lending services and products. Access to electronic services may be limited or unavailable during periods of peak demand, market volatility, systems upgrade, maintenance, or for other reasons. So what are the key trends that are likely to drive Apple's results? While Apple launched its latest iPhone 13 handsets in September, we don't expect the device to be a major driver of Apple's sales, as it was available for sale for just about a week in Q3.
However, it's possible that Apple could be seeing some pressure on device supply, due to the ongoing semiconductor shortage. Apple's margins are also likely to trend higher on a year-over-year basis, driven by a growing mix of services revenues, higher average prices on iPhones, and other devices. See our interactive dashboard analysis onApple Pre-Earningsfor more details. Or is there an opportunity to expand the business' product line in the future? If investors know Apple will grow in the future, the company's valuation will be higher.
The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Apple listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others. Cash is vital to a company in order to finance operations, invest in the business, pay expenses, etc.
Since cash can't be manipulated like earnings can, it's a preferred metric for analysts. In the event you like Apple stock but feel that investing in individual stocks is riskier than you're comfortable with, consider purchasing a mutual fund or exchange-traded fund that has Apple in its portfolio. Funds contain bundles of securities from different companies and/or industries. The diverse holdings can make them a safer investment than individual stocks. The semiconductor giant also reported slight improvements to inventory levels, albeit still about 40% lower than normal, as well as lower volumes of expedited order requests. These items, together, suggest that the ongoing chip supply shortage may be finally starting to ease.
The expected trend is further corroborated by recent announcements from Hon Hai Precision Industry, the key assembler of Apple's iPhones. Hon Hai's Chairman Young Liu is predicting "unprecedented performance in the first quarter" that will surpass historical output levels. The global leader in contracted consumer electronics manufacturing is gearing up to ensure adequate levels of inventory for customers this quarter, including Apple, to prevent further unravelling of supply chain disruptions. As discussed in our previous coverage, Apple remains a top hedge against mounting macro headwinds like inflation and rate hikes. The stock's latest pullback also puts its current trading multiples at a small discount compared to those during last year's February tech stock sell-off. It's currently trading at about 28.8x TTM earnings compared to above 30x at the onset of 2021's early-year sell-off.
Apple stock is now standing in a unique position in terms of timing, with Fed Chair Jerome Powell to give an update on monetary policy decision on Wednesday and the tech giant's corporate earnings release on Thursday. On one hand, Wednesday's briefing from Powell could lead to further market volatility as investors brace for an announcement on the timing and magnitude of upcoming rate hikes. On the other hand, Apple's results and outlook to be released on the following day could come in strong and save the day by reversing the dire sentiment over the technology sector. Yet all of these reasons are backwards looking and speak nothing to what will occur in the future. I find it highly concerning that investors seem to be very enthusiastic about the fact that AAPL is reporting "record numbers," but it is instead the forward growth rate that will drive future returns. The fact that AAPL earned over $123 billion in revenues in the latest quarter is very impressive, but should not be a reason to be buying the stock at 28x forward earnings.
The new iPhone 12 handsets saw their first full quarter of sales over Q2 FY'21, helping iPhone revenue rise 65% compared to last year. The iPhone is Apple's most profitable hardware product and the new handset is also priced at a premium compared to its predecessors, helping margins. For example, Apple says that it has about 660 million paid subscriptions on its platform now, marking an increase of 145 million compared to last year.
Separately, Apple said that it also benefited from a favorable foreign exchange environment. It is the largest company in the world and can still make money. Apple has an attractive valuation and there are still lots of opportunities to sell hardware. It is also adding more and more services and bundling them. It is a growing part of everyday lives and has increased relevance every day. Standard online $0 commission does not apply to over-the-counter equities, transaction-fee mutual funds, futures, fixed-income investments, or trades placed directly on a foreign exchange or in the Canadian market.
Options trades will be subject to the standard $0.65 per-contract fee. Service charges apply for trades placed through a broker ($25) or by automated phone ($5). See the Charles Schwab Pricing Guide for Individual Investors for full fee and commission schedules. Most recent earnings call Tuesday, the stock saw a steep rebound following announcement of a strong outlook on cloud-computing business growth. However, demand definitely remains robust, which underscores the tech giant's continued dominance across the market segments in which it operates in. And the company's management team has clearly done a good job in ensuring demand remains in their pockets despite the current shortfall in supply.
These, together, are all positive signs that the company's valuation prospects remain intact. In addition to having Apple in your portfolios, you can quickly add positions using our predefined set of ideas and optimize them against your very unique investing style. A single investing idea is a collection of funds, stocks, ETFs, or cryptocurrencies that are programmatically selected from a pull of investment themes.
After you determine your investment opportunity, you can then find an optimal portfolio that will maximize potential returns on the chosen idea or minimize its exposure to market volatility. Investment risk management requires an estimate of the probability of extreme price changes. The 1 week price change reflects the collective buying and selling sentiment over the short-term. A strong weekly advance is a sought after metric for putting potential momentum stocks onto one's radar.
