Source: PaxForex Premium Analytics Portal, Fundamental Insight
Apple Inc. holds the title of the world's most valuable company in terms of market capitalization, and its remarkable journey has seen it reach unprecedented milestones since its establishment 47 years ago. Demonstrating an exceptional ability to capture the consumer market, Apple has consistently dominated various product categories, notably achieving a leading position with its iconic iPhone. This device has amassed an impressive user base exceeding one billion individuals, effectively acting as a catalyst for driving consumer interest towards its extensive product lineup.
The impact of Apple's formidable products on its stock performance is staggering, with its shares having surged by an astounding 135,000% since its initial public offering in December 1980. While one might assume that the prime window for Apple investments has long passed, the company's trajectory indicates otherwise. Notably, Warren Buffett's Berkshire Hathaway has continued to augment its holdings in this tech behemoth, recently bolstering its position during the first quarter of 2023.
Apple, renowned for its consistent and reliable growth, remains a compelling addition to any investment portfolio. This enduring appeal highlights why the opportunity to invest in Apple's stock is far from being a thing of the past.
Apple may not always be the pioneer in entering new markets, but it has consistently demonstrated a remarkable ability to leverage existing technology and infuse it with its unique design sensibilities to allure fresh users and eventually establish dominance within those industries. This pattern of success has been vividly exemplified in Apple's forays into smartphones, tablets, smartwatches, and headphones. In each of these cases, Apple joined the competition after others had already claimed leadership positions, yet managed to outshine them significantly.
Remarkably, even in times of economic adversity over the past year, consumer preference for Apple's products has remained steadfast. While many tech companies grappled with reduced consumer spending, Apple's performance bucked the trend. According to IDC data, the second quarter of 2023 witnessed a 13% decline in PC shipments year over year, with industry giants like Lenovo and Dell experiencing even steeper drops of 18% and 22%, respectively. In stark contrast, Apple's MacBook shipments actually increased by 10% during the same period.
A similar tale unfolds in the realm of smartphones. Counterpoint Research reported a substantial 24% decline in smartphone shipments in Q2 2023, with Samsung's sales plummeting by 37%. Apple, on the other hand, exhibited a more modest 6% decline. Even in the face of economic challenges, consumers continued to exhibit a strong preference for Apple's offerings.
One of Apple's key strategic strengths lies in its ability to foster an interconnected ecosystem among its products, enticing consumers to remain loyal over the long term. Furthermore, exclusive apps such as Messages and FaceTime serve as additional incentives for users to stay within Apple's ecosystem rather than venturing towards rival platforms.
While Apple has encountered macroeconomic headwinds in the present year, it stands to reap substantial benefits as the market rebounds. Consequently, adopting a long-term perspective when considering Apple's stock is paramount. The company consistently delivers attractive profit margins, with products yielding 35% and digital services boasting an impressive 71% as of Q3 2023. Apple remains in a robust position and is poised for potential growth in the coming five to ten years, bolstered by its commanding position in the tech industry.
Apple's stock has experienced an 11% decline since the release of its Q3 2023 earnings report in early August. This marked the third consecutive quarter of revenue reduction, with a 1% year-over-year decrease in revenue. These setbacks were influenced by a broader consumer retreat in several of its product segments.
Despite these challenges, Apple has demonstrated its resilience by outperforming competitors in both the smartphone and personal computer markets during the quarter. Additionally, the company has continued to witness promising growth in its services division. In Q3 2023, Apple's services segment recorded an impressive 8% year-over-year expansion, contributing significantly to the company's revenue, reaching $21 billion.
This digital business encompasses earnings generated from subscription-based platforms like Apple TV+ and Apple Music, as well as income derived from the App Store. These offerings have consistently proven highly lucrative for Apple, allowing it to rely less on product sales, particularly during uncertain economic times. Notably, this business segment is on a trajectory that could potentially surpass the iPhone as the company's highest-earning division. In fiscal year 2022, services reported a remarkable revenue growth of 14%, doubling the growth rate of the iPhone.
Drawing from Apple's historical growth patterns, it becomes evident that seizing opportunities during market downturns can be advantageous. Apple's stock rarely experiences significant discounts, and given its commanding position in the consumer technology sector and the flourishing services division, it is likely to yield substantial returns over the long term.
In light of these factors, it is clear that the window of opportunity to invest in Apple stock remains open. Given its current position, Apple represents an excellent choice for long-term investors, offering the potential for significant gains in the future.
As long as the price is below 180.00, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 169.50
- Take Profit 1: 165.00
- Take Profit 2: 159.00
Alternative scenario:
If the level of 180.00 is broken-down, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 180.00
- Take Profit 1: 185.00
- Take Profit 2: 190.00
