Source: PaxForex Premium Analytics Portal, Fundamental Insight
Over the last decade, Apple has proven to be an exceptional investment, with its shares skyrocketing by an astonishing 1,000% since late April 2013. Even legendary investor Warren Buffett has reaped the benefits, as Berkshire Hathaway has been a shareholder for more than seven years. However, with a current market capitalization of $2.6 trillion, investors may be curious about what lies ahead for this dominant enterprise. They may also be pondering the future of Apple's stock in the coming years. Investors are well aware of the significance of a single product for Apple's financial success. In the latest fiscal quarter (Q1 2023 ended Dec. 31), the iPhone accounted for 56% of the company's total revenue and served as the primary gateway product to attract consumers.
During the Q1 2023 earnings call, CFO Luca Maestri proudly announced that Apple now boasts over 2 billion active devices in its installed base, which is a significant achievement that highlights the company's omnipresence. This impressive number has doubled in just seven years, with the majority of the devices being iPhones. However, Apple's other products have also been successful, and the company is not resting on its laurels. Innovation has always been a top priority for Apple, and it is evident in the refreshed versions of products like the iPhone, MacBook, and Apple Watch, as well as the introduction of completely new products. One of the most eagerly anticipated new products is a headset that combines augmented reality and virtual reality, set to launch in June. Rumors also abound about a folding phone in the works.
But, the possibility of an electric vehicle is potentially even more significant. While information about the vehicle remains scarce, it is hard to imagine an Apple-designed and software-integrated automobile not immediately becoming a hit. This has the potential to be a game-changer for Apple since the car market is enormous. Although Apple is not typically the first company to bring a new product to market, its offerings are often the best, and its ability to increase the number of active devices worldwide, whether they are phones, tablets, headsets, or cars, reinforces its powerful ecosystem and strengthens its economic moat.
In addition to its hardware products, Apple's services segment is becoming an increasingly vital component of the business, driving customer loyalty and retention. In the latest fiscal quarter, services made up 18% of total sales, a percentage that has risen steadily over time. This segment has a gross margin of over 70%, significantly higher than the products group, which should drive Apple's profitability higher in the coming years.
Apple's expansion into financial services has also been noteworthy, with the addition of Apple Pay, Apple Card, and a high-yield savings account. These offerings appeal to a more affluent customer base, making them promising revenue drivers in the long run.
Given its enormous size and impressive historical stock performance, it is hard not to admire Apple. With more active devices, established pricing power, and a growing services segment, the company's revenue should continue to rise, resulting in higher profits. Berkshire Hathaway has already profited handsomely from its investment in the company, with Apple constituting 44% of its overall portfolio as of Dec. 31, indicating that Buffett is still bullish on the stock.
It's no surprise that Apple has been highly rewarding for its shareholders. In just the last three years, the share price has risen by 132%. In addition, Apple has paid out over $47 billion in dividends since the start of fiscal 2020. But that's not all - the company has also been actively repurchasing shares, spending an impressive $267 billion on buybacks in the past 13 fiscal quarters.
As a result, Apple's cash-generating capabilities are exceptional, and the company is well-positioned to continue delivering outstanding fundamental performance, which bodes well for the stock and its investors.
As long as the price is above 157.00, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 169.20
- Take Profit 1: 175.00
- Take Profit 2: 185.00
Alternative scenario:
If the level of 155.00 is broken-down, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 157.00
- Take Profit 1: 150.00
- Take Profit 2: 144.00
