Why are Apple’s shares considered an attractive investment?
They represent a stake in a phenomenally successful company. In terms of impact on the everyday lives of hundreds of millions of people, Apple’s founders and their successors stand alongside Henry Ford and Alexander Graham Bell. The company’s key products have entered the language, whether the Mac computer, the iPhone, the Apple Watch and, of course, iTunes, described as the world’s biggest juke-box. There was even a 2015 film about the company that took its name from co-founder Steve Jobs.
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Good news for consumers, undoubtedly, and good news also for investors. Apple’s recent results, covering the three months to December 31 2016, saw the company’s chief financial officer Luca Maestri announce: ‘We returned nearly $15 billion to investors through share re-purchases and dividends during the quarter.’ The quarterly dividend itself was 57 cents a share, identical to the dividend for the previous three quarters and up on the 52 cents paid for each of the four quarters before that.
Business is brisk at Apple. On January 31, Tim Cook, Apple’s chief executive, said of the last three months of 2016: ‘We’re thrilled to report that our holiday quarter results generated Apple’s highest quarterly revenue ever, and broke multiple records along the way. We sold more iPhones than ever before and set all-time revenue records for iPhone, Services, Mac and Apple Watch.’
Who should include Apple in their portfolio?
Those seeking exposure to the Dow Jones Industrial Average, the elite Wall Street index that contains just 30 stocks, representing the cream of publicly-listed US companies. Apple’s in there, along with Boeing, ExxonMobil and IBM.
People looking to invest in technology and innovation. Apple’s output of bright ideas shows little sign of slowing down, and its new product launches have a spellbinding effect on investors and the tech industry.
Day traders, hoping to profit from short-term movements in Apple’s share price.
How has Apple’s share price performed recently?
In the past five years, the shares traded between a low of $55.79 and a high of more than $135.62.
Aside from the powerful brand and the household-name products, what are the positive factors behind Apple shares?
Its juicy profit margins, estimated at well over 30 per cent.
Apple’s balance sheet, which is impressively strong by any standards and especially so when compared with some in the technology sector.
The market that is served by Apple is far from saturated. Emerging giants such as China and India should provide the tech-hungary consumers who will power demand for Apple’s best-known products.
While such demand may level off in the developed world, Apple is shifting the focus here to its Services businesses such as the phone-based payments system Apple Pay and the storage and computing service iCloud.
Apple is focused on looking after its shareholders – again, in contrast to many in the sector – with a commitment to a progressive policy on shareholder returns.
What are the negative factors that may affect Apple’s share price?
China is becoming a highly competitive market for the sort of products offered by Apple and there is no guarantee that Apple will come out on top.
In India, the authorities have frustrated Apple’s attempts to sell lower-cost reconditioned phones to the public.
Sales of iPhones and iPads have been softening and the major innovation of recent years, the Apple Watch, has not been universally admired.
The uncertain attitude of the new administration in Washington to technology giants such as Apple, Google and Microsoft is another potentially negative factor.
Apple may be looking after shareholders now. It didn’t always. Apple’s initial public offering was in 1980. It paid its first dividend in 1987 and continued doing so until ceasing in 1995. Payments were only resumed as recently as 2012. Shareholders will hope history doesn’t repeat itself.
How to invest in Apple
To invest in Apple, you would need to buy or sell Apple shares. The company is listed on NASDAQ, the US exchange associated for many years with fast-growing technology stocks, but you can buy or sell stocks through a broker, such as eToro.
When you buy Apple stocks on eToro, you pay 0% commission. Investing in Apple on eToro is quite straightforward:
On this page, click the “Trade” button.
Open a long (BUY), non-leveraged position on the AAPL stock on eToro.
The trade will be visible in your portfolio. The underlying asset will be held in your name.
If you wish to take advantage of some other trading features, you can also open a short (SELL) position that will go up in value if the AAPL stock goes down, or apply leverage to receive more market exposure. However, utilising such features incur rollover fees on the eToro platform and are available only for selected countries.
Are Apple shares right for you?
Apple is a dominant company in its sector, one whose name is synonymous with elegant consumer-electronics products and highly-desirable services. Its share price is strong and it is returning plenty of cash to shareholders.
However, competition is intensifying in a fast-moving market in which today’s giants can tomorrow find themselves on the wrong side of events.
Ultimately, the question is whether Apple is going ‘ex growth’ or whether the best, in terms of innovation and profitability, is yet to be.
*This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation.
*Past performance is not an indication of future results. All trading carries risk. Only risk capital you're prepared to lose.