Decoding The Stock - APPLE
The stock market has thousands of stocks that one can choose to invest in. From small and unknown penny stocks to large blue-chip stocks, there are a plethora of options available to investors. While analyzing and researching a company or stock might seem like a challenging task, in reality, it isn’t that complicated. With proper research and analysis, investors can make well-informed investment decisions that help them generate wealth from the market.
We at Financial Education believe that every investor should carefully analyze all their investments and deploy their capital in stocks that have high potential to grow and generate huge returns. When it comes to investing in tech stocks, Apple (Ticker: AAPL) is one of the largest blue-chip stocks that has been an investor favorite for a long time. Rising by almost 84% in 2020, Apple’s stock has generated huge wealth for its investors and beat the market by a huge margin, where the S&P 500 was up by only 15% in 2020. This increase is even more than the tech giant Amazon’s stock rise, where Amazon’s stock rose 80% in 2020 and apple was up by 84%.
With a market capitalization of over $2 trillion currently, Apple is the most valuable stock in the world. Wall Street has been bullish on this tech stock for quite a while. Apple’s revenue growth is expected to grow by almost 15% this year, which might make this stock a good investment option for investors. In this article, we shall explore Apple Inc. and its stock in detail to give you a holistic view of this organization so that you can make better investment decisions. So, let’s get started!
Understanding The Basics of APPLE Inc.
We at Financial Education believe that before you decide to invest in Apple Inc., it is crucial that you understand the company from the basics. Apple Inc. is an American multinational technology company that specializes in computer software, consumer electronics, and online services. Apple Inc. is the most valuable company in the world and the world’s largest technology company by revenue which amounted to $274 billion in the year 2020. As of June 2021, Apple is also the world’s fourth-largest PC vendor in the world by sales and the fourth largest smartphone manufacturing company.
Apple Inc. is part of the Big Five. Big Five or also known as Big Tech are the Tech Giants of the United States and are the largest and most dominant organizations in the technological sector. The Big Five includes Apple, Google, Facebook, Microsoft, and Amazon. These companies are the most valuable and prominent organizations in the information technology sector and dominate majority of the market share.
Steve Jobs, Ronald Wayne, and Steve Wozniak founded Apple in 1976 in order to develop and sell the Wozniak Apple I Personal Computer. Apple was incorporated by Steve Jobs and Wozniak as Apple Computer Inc., in 1997. Soon after, the sales of Apple Inc. grew rapidly and over the next few years, they became a big name in the technology sector. Apple went public on 1980 and gained fame and huge financial success. Apple Inc.’s corporate headquarters are located in the heart of Silicon Valley in California.
According to the founder of Financial Education, Jeremy Lefebvre, Apple has been one of the most innovative and constantly evolving companies in the tech sector and has been able to keep up with time and the ever-changing tech industry. During their annual WWDC Keynote speech held on June 22, 2020, Apple declared that it will transition its popular Mac lineup away from Intel processors to processors of their own which will be developed in-house. The announcement was expected by industry analysts, and it has been noted that Macs featuring Apple’s processors would allow for big increases in performance over current Intel-based models.
On November 10, 2020, the MacBook Air, MacBook Pro, and the Mac Mini became the first Mac devices powered by an Apple-designed processor, the Apple M1. Timothy Donald Cook has been the chief executive officer of Apple since 2011. Timothy Donald Cook previously served as the company’s COO under its co-founder Steve Jobs. Apple is also the first publicly traded U.S. company to be valued at over $2 trillion. With high level of brand loyalty and being the world’s most valuable brand as of 2021, over 1.65 billion people use Apple products worldwide.
Apple AAPL Current Share Price
As of June 2021, Apple’s share price, ticker: AAPL, is trading at levels varying from $135 to $140. AAPL is listed on the U.S. NASDAQ stock exchange and the stock traded at its all-time high level of $145 during January 2021. With the current share price being quite close to its all-time high level, AAPL can be said to be in a short-term uptrend. However, the price of AAPL has been range-bound for quite some time with levels $110 to $100 acting as a support and levels between $135 to $140 acting as a strong resistance.
With Apple’s market capitalization crossing over $2 trillion in 2021, Apple Inc. is the world’s most valuable company. This is one of the reasons that caused Apple’s stock price to surge during 2020 during the pandemic. While the entire market was witnessing a huge crash and downfall, tech stocks like AAPL were making new highs and rising in a strong uptrend. AAPL also traded at its all-time high level of $145 during January 2021, which is the highest listing for Apple during its entire 45-year history as a publicly traded company.
Apple’s stock was in a strong bull run during 2020 due to several factors, with the Covid-19 pandemic being one of them. Due to the pandemic and lockdowns all around the globe, demand for consumer electronics surged as people were locked indoors with limited means of entertainment. Demand for consumer electronics like smartphones, laptops, and iPads was extremely high, which therefore drove Apple’s sales through the roof, resulting in a huge surge in the stock price. Work-from-home was also one of the factors that caused a high demand for Apple’s MacBook and other electronic devices. However, several other factors were responsible for the bull run of AAPL in 2020, which we shall discuss below.
As seen in the weekly chart of AAPL below, the stock has been in a short-term uptrend trading at levels between $130 to $140. According to Financial Education, the stock was in a consistent uptrend from March 2020 up until August 2020. Since August 2020, AAPL has been trading in a range and the stock price has been sideways for quite some time with small moves and no prominent trend. While the stock may be trading in a range, this might be a consolidation phase with possibilities of another breakout soon and the continuation of another uptrend. The stock can be seen trading between levels of $110 to $140 for the past few months. This might be a good time for long-term investors to add Apple to their portfolio as this is a great growth stock that has huge potential.
Reason Behind AAPL’s Bull Run in 2020
The stock price of Apple witnessed a strong and consistent bull run from March 2020 up until August 2020, increasing the price by over 84% in just a matter of months. There are several reasons behind AAPL’s price rise and the pandemic is one of the major factors that boosted sales of consumer electronics all across the globe. Let’s go over some of the factors that helped Apple’s stock price rise and reach all-time high levels during 2020.
Increased Revenue and Sales
Apple Inc. reported a record $64.7 billion in revenue in Q4 of 2020. According to data, Apple sold $26.444 billion in iPhones, $9.032 billion in Macs, and $6.797 billion in iPads during the quarter, with combined “wearables, home, and accessories” sales of $7.876 billion and services at $14.549 billion. According to Apple’s CEO Tim Cook “Despite the ongoing impacts of COVID-19, Apple is in the midst of our most prolific product introduction period ever, and the early response to all our new products, led by our first 5G-enabled iPhone lineup, has been tremendously positive”. This was one of the major reasons behind the price surge of AAPL.
Launch of The iPhone 12
Apple’s launch of the iPhone 12 was one of the biggest revenue generators for the company in a long time which helped boost the share price and revenue of the company. In Q4 of 2020, Apple’s new iPhone 12 was responsible for over half of the company’s total revenue. Apple sold $26.444 billion in iPhones in Q4 of 2020. The launch of the new iPhone 12 triggered a huge turnaround for Apple in the final quarter of 2020. According to data, Apple reportedly moved 195 million iPhones in 2020, an impressive performance that bettered estimated shipments of 185 million units last year.
Why Apple Might Be a Top Growth Stock
Here are some reasons why Apple might be a top growth stock. Long-term investors can consider adding Apple to their portfolio as the stock has huge potential. The following factors can help Apple’s stock grow consistently and fuel powerful uptrends in the coming future –
Apple Services is a Trillion Dollar Business
According to several analysts, Apple’s services business represents almost half of its $2 trillion-plus market valuation. Apple services are responsible for the growth in both revenue and sales of Apple as the company has strong brand loyalty and an ever-growing customer base. Services like App Store, iCloud Storage, Apple Care, and Apple Music are now a $60 billion-plus revenue stream for Apple and are rapidly growing every year.
Apple’s 5G Smartphones
Apple’s entry into 5G smartphones has taken the company to the top of the smartphone sales chart. With almost $26.444 billion in revenue from iPhones, Apple’s new 5G smartphones can help the company boost its revenues and dominate the Smartphone market. According to Chipmaker Micron Technology, sales of 5G smartphones could hit 500 million units in 2021. We at Financial Education believe that Apple already seems to be in a great position to corner a larger share of that market, and it may even exceed its targets if it continues holding on to its share.
Possibility of Reaching a $3 Trillion Market Valuation
Another reason that makes Apple a top growth stock is the possibility for it to reach a $3 trillion market valuation. With a current market valuation of over $2 trillion, Apple is the most valuable company in the world. Analysts believe that with the exciting new development of the Apple Car along with next-generation 5G iPhones, Apple has the potential to reach a $3 trillion market valuation. According to Citigroup, developing the Apple Car could boost the company’s sales by 10% to 15% by 2024.
Apple has barely scratched the surface of its potential. With a positive future outlook and serval growth possibilities in almost every sector that it operates in, Apple and its stock are definitely on the rise. We hope that this article provided you with valuable information and a clearer picture of Apple Inc. With all this information, you can make a better and well-informed decision on whether you should invest in Apple’s stock or not. However, before making any investment decisions, be sure to check the current market conditions and other factors that might affect the value of a stock, as investments in the stock market are subject to market risk. If you liked this article, make sure to visit Jeremy Lefebvre’s YouTube channel “Financial Education” for more such informative content! Happy investing!