Should you buy Apple shares as the company is worth almost 3 trillion dollars?
Apple is a successful technology company and a lucrative
investment option for many investors. This week Apple market capitalization hits the $3 trillion milestone. Now is it a perfect time for you to buy Apple
shares or is it too late?
Before answering this question I can say, five years ago Warren Buffett decided to buy Apple shares and it has earned Buffett a paper profit for him in excess of $100bn. So, if there is an opportunity you should grab it.
Apple’s Present Scenario
After reaching the $3 trillion milestone Apple has turned into the world’s most valuable company. But bears have suggested that Apple is running out of steam which is dangerous for this company. The Bears HaveSpoken: Where are the new products lineup? Where is the visionary leadership to run business? What about the threat created by cheaper competitors?
From my point of view, some of those concerns are correct because I realize the rise of less costly smartphones could hurt Apple revenues and profits. But after all the challenges so far, the company has proven to be highly strong by generating record revenues of $365bn in the last year. The company is making around $40m of sales every hour of the year on average. The profit margin is also high which $109bn is around.
So, I do not fully agree with the Bear statement. In fact, some of the weaknesses which are seen with the open eye are actually the strengths of the company in my opinion. Lack of innovation is basically helping Apple to focus on a tightly controlled, small portfolio of products which reduce the complexity of the supply chain. Besides, The Company doesn’t cut the profit margins by producing hundreds of less lucrative products.
After all that Apple will be at risk if an economic downturn happens which could hurt demand for Apple’s premium products, damaging revenues and profits.
The decision: Should I buy Apple shares or not?
The Apple share price has been increasing recently. I don’t think it will fully impact its valuation. In fact in the long term I can see the potential for the apple share price.
Ups and downs is normal in a volatile tech market. That is not a big factor for me because I think Apple has the potential to be a cash machine for decades to come. By reinventing itself for changing circumstances before – Apple has been already listed on the stock market for over 40 years which is appreciable.
Apple has a huge market of customers for their premium products. Many of them are deeply addicted to its product and service. They don’t prefer to switch to other brands. The company has massive opportunities to scale its economies. Its iconic brand continues to give it pricing power which is easy to endure for their premium customers.
Its price-to-earnings ratio of 30 is not cheap. It gives me confidence that Apple can keep increasing its earnings in the coming years. I'd highly wanted to add the company to my portfolio at that price. Because If Apple will ever reach a $4 trillion valuation, I don’t want to be kicking myself for having missed a great opportunity.
So, I would buy Apple shares at today’s valuation. Now it’s your decision. Best of luck.