APPLE:FUNDAMENTAL ANALYSIS + TECHNICAL ANALYSIS. Apple is a technology company that was founded in 1976, almost half a century ago. Today, it is the world's most valuable company, with a market value of $2.43 trillion. Despite a difficult 2022, where its stock price fell 27 percent along with other tech companies, Apple's stock has grown more than 20% since the beginning of this year as tech stocks make a comeback on Wall Street. Despite this growth, Apple's price-to-earnings (P/E) ratio of 26 is fairly low compared to competitors like Amazon and Walt Disney.
If you're an investor looking to invest in Apple, it's important to consider some key aspects of the company. One of the most important factors to consider is the company's focus on developing exceptional products. By maintaining high standards and focusing on product development, Apple has been able to charge premium prices and foster consumer loyalty. In fact, as of September 2022, Apple has exceeded a 50% market share for smartphones, outpacing Alphabet's Android operating system. This is a significant accomplishment, as consumers tend to stick with their preferred operating system for extended periods. Additionally, expanding market share enables Apple to cross-promote its product line, providing users with complementary products that share a similar design language.
Apple's strong product line has propelled the company's stock up by 248% over the past five years and 911% over the past decade. Furthermore, Apple's revenue has increased by 48% to $394 billion since 2018, while operating income has surged by 68% to $119 billion.
Another important factor to consider is the company's focus on maximizing iPhone profits. The iPhone segment earned 52% of the company's total revenue last year, earning $205.4 billion and up 7% YoY. As such, Apple's smartphone business is critical to the company's success, making upcoming changes in iPhone production promising for long-term profits. For instance, Bloomberg recently reported that Apple plans to replace telecom and WiFi/Bluetooth chips from companies such as Qualcomm and Broadcom with its own versions by 2025. Additionally, the media site reported that Apple plans to stop using iPhone displays from Samsung and LG as early as 2024 and switch to its own versions. Ending costly partnerships in favor of in-house designed components will likely boost iPhone profit margins and strengthen the business by reducing Apple's reliance on outside technology companies.
Apple is also strengthening its business by expanding into other areas, such as its subscription-based services business. Apple Music, TV+, iCloud, News+, Fitness+, and Arcade are thriving offerings that have doubled revenue growth, up 14% YoY to $78.1 billion, in fiscal 2022. The segment's 71.7% profit margin confirms the profitability of the digital business, while the same figure for products was 36.3% for the year.
It is also reported that Apple is diversifying its product line by entering the augmented/virtual reality (AR/VR) market this year and launching a new headset. According to Grand View Research, the AR market will grow at a compound annual growth rate (CAGR) of 40.9% through at least 2030, while the VR market will grow by 15% in the same time frame. Thus, Apple's new headset could bring significant profits as the markets evolve.
Overall, Apple has established itself as a solid growth stock over the years, and upcoming events make it a screaming buy this month. If you're considering investing in Apple, be sure to keep these key factors in mind. By focusing on product development, maximizing iPhone profits, and expanding into other areas, Apple has positioned itself for continued success in the future.
