Apple is a darn good investment

But at what price? Wall Street Connected Profit Like The Pros Brought to you by: Dear Reader, We have some BIG UPDATES for all you Wall Street Connected subscribers. [And you need to take action now to make sure you don't miss out!]( Our newsletter got a complete makeover. We overhauled the format and layout of the newsletter, making it easier to read and simpler to follow. And gave it a nifty new title - THE SPILL [But you won't receive this newsletter unless you sign up HERE.]( Because pretty soon, Wall Street Connected will disappear FOREVER! Proprietary Data Insights Financial Pros Top Stock Searches This Month Rank Name Searches #1 Ocugen 2,046 #2 Tesla 907 #3 AMC 873 #4 Visa 842 #5 FuelCell Energy 512 #6 Apple 508 Sponsored [Food Co. Can't Stop Growing]( We Spill the Beans on This Plant-based Food Company. They're Eating Other Company's Lunch. [Learn More.]( What we’re watching [Apple Is A Darn Good Investment]( A look at Apple's numbers which put it as one of the best investments available. [Watch Now]( Stock Analysis Apple is a darn good investment Chew on this... - Apple has sold over $1 Billion every day in 2021. - In the last 12 months, the company generated $100 Billion in operational cash flow or nearly $6.00 per share. - Revenues grew at a 10-year average of 21.69% and 12.95% through 2021. - Shares are up nearly 2,000% ex. dividends since 2010 and more than 110% since the start of 2020. And shares are still cheap! Funny enough, the stock didn’t crack the top 5 ticker searches by financial pros this month (it came in at #6). It sounds too good to be true. Everyone already owns this stock. But the numbers don’t lie. Apple is one of the best companies and investments out there. And here’s why. Apple’s Business Most of us are familiar with Apple. But for those who aren’t aware of the entirety of its business, Apple reports in two main segments: products and services. Revenue for each breaks down as follows: As the flagship product, iPhones have been the mainstay of Apple’s business since its introduction in 2007. Wearables and accessories include items such as the Apple Watch, Apple TV, etc. Services include revenues from advertising, the app store, and cloud services. Like many tech companies, Apple’s services run a better gross margin than products. However, product sales enable many of the services. We expect services to become a significant contributor to total profits in the next several years as wearables become more common. Interestingly, while the majority of sales happen in the US, the total sales to the rest of the world are larger. Now, Apple noted supply chain issues will impact its production as semiconductors remain scarce along with other key components. Plus, Covid-related shutdowns to manufacturing facilities in Southeast Asia curtailed output. In fact, the company said it lost $6 Billion in sales last quarter due to the semiconductor shortage. Nonetheless, we think this helps put pressure on share prices short-term, providing a better entry point. Financials It’s crazy to think that we lost Steve Jobs a decade ago. With Tim Cook at the helm, Apple has delivered incredible returns for shareholders. Margins, though they initially declined, have recently improved as services become a bigger percentage of total sales. We’ve also seen Apple embark on a massive shareholder-friendly buyback program coupled with a dividend that currently yields 0.58%. What’s equally impressive has been the consistent profitability for the company with high returns on assets, equity, and invested capital. To keep themselves on top, Apple has increased research and development from 3.5% of revenues to 6% in the last five years. That’s helped the company lead and monetize new trends such as wearables. Here’s a fun fact. If you bought shares at the end of 2012, they would have cost you $19 (split adjusted). Apple has generated that much in free cash flow per share just in the last 5-6 years. That’s how profitable the company is. Valuation Ok, so with shares near all-time highs, it’s a bad time to buy Apple right? Apple’s price-to-earnings ratio over the last 12 months sits at 26.92x, below the sector average but above Apple’s historical average. Yet, it’s not as overpriced as you might think. This graphic shows the typical range for Apple’s P/E ratio runs between 10x-20x. That would put a fair price for Apple’s stock between $57- $113 per share. Yes, that’s below current levels. But it’s important to note how the stock is valued relative to the rest of the sector. There’s nothing that says shares of Apple have to decline. They could just as easily remain flat as earnings catch up, which would only take a year or so. No, that’s not ideal. But if the market corrects like many think it will, that could be the best scenario. Now, we also want to highlight two other metrics - price to cash flow and price to sales. The first indicates Apple is fairly valued relative to the IT sector. The second says it’s a bit more expensive. Both are fair assessments. Apple is widely owned and investors place a premium on its performance. That’s for good reason. Apple is THE brand to own in the tech space. Consumers pay a premium for their products. And with fewer products on the shelves, discounts will be far and few between, meaning better margins. Our Opinion - 7/10 Apple is a great company. Period. Arguments about phone supercycles ending and so forth never pan out. We expect supply chain issues to resolve themselves in the next year. In the meantime, we welcome pullbacks in the stock that give us cheaper entry points. Ideally, we like shares down near that $113 we noted earlier. [Make sure to sign up for The Spill to keep receiving our premier investment newsletter.]( # [submit to reddit]( [submit to reddit]( [submit to reddit]( To ensure delivery of all emails, [whitelist us](. Update your email preferences or unsubscribe [here](. View our privacy policy [here](#). Copyright ©2021 InvestingChannel. All rights reserved. 1325 Avenue of the Americas, Floor 27 & 28 New York, New York 10019 Disclaimer: This is not investment advice. This InvestingChannel, Inc. newsletter is for information purposes only and opinion-based. Futures, forex, stock, and options trading are not appropriate for all investors. There is a substantial risk of loss associated with trading these markets. Losses can and will occur. No system or methodology has ever been developed that can ensure returns or against losses. No representation or implication is being made that using any of these methodologies or systems will generate returns or ensure against losses. Investors should be cautious about any and all investments and are advised to conduct their own due diligence prior to making any investment decisions. [Link](