Today, the same greed that has been inherent in our civilization throughout history is seen in the stock market and especially in Apple stock. The company is trading at a historically high valuation near unreasonable levels. The company's stock has been rising exponentially in recent months not because the company excelled even more in its business but because the market was fearful.
The fear in the financial market brought capital concentration in the select name of one of the most popular, resilient, and profitable technology companies including Apple. As a result, even more, money poured into Apple showing the stark discrepancy between Apple's stock and the real world. Valuation appreciation built on greed will likely end because of the same greed; therefore, investors should hold off on investing more into Apple.
Let me explain, the inflation rate today is extremely high at over 6% while the 10-year Treasury yield hovers around 1.5%. Therefore, it is only logical for investors to pile money into stocks. Holding cash, making savings account, or investing in long-term bonds are not as attractive as investing in high-quality and resilient companies.
Allocating capital to these assets will only return losses creating more desire from investors to invest in technology companies like Apple. Further, because inflation is expected to be moderately high for some time, this environment favoring capital concentration in the stock market will likely persist. Investors pumped money into stocks and siphoned funds out of bonds and cash as global markets braced for higher interest rates, BofA's weekly flow show report showed on Friday. Apple Inc. is a technology company that specializes in computer software, electronics, media devices and online services. Founded in 1976 by Steve Jobs and Steve Wozniak in Cupertino, California, the company now offers its products all around the world. In addition, Apple was the first publicly-traded U.S. company to reach a trillion dollar valuation.
Given that consumers worldwide know and trust the company, investors, both new and experienced, are widely interested in buying equity in Apple. Below, we take a closer look at how to become an Apple shareholder. If you want further hands-on guidance with your investing strategy, consider enlisting the help of a trusted financial advisor. Customers who value support You can also use a brokerage account to invest in a mutual fund or exchange-traded fund that invests in Apple. Look for funds that focus on the technology sector or on large cap stocks.
Zacks' proprietary data indicates that Apple Inc. is currently rated as a Zacks Rank 2 and we are expecting an above average return from the AAPL shares relative to the market in the next few months. Its Value Score of D indicates it would be a bad pick for value investors. The financial health and growth prospects of AAPL, demonstrate its potential to underperform the market.
Recent price changes and earnings estimate revisions indicate this would not be a good stock for momentum investors with a Momentum Score of D. Rose 34% last year and has pulled back $10 this week from all-time highs due to the tech meltdown. Expected to give only 2-3% earnings growth, but it usually surprises. Last year it suffered supply chain delays, but that should be a tailwind this year, including China. Services make up 19% of total sales and will grow a lot, and services offer much higher margins than sales.
Some investors seek out stocks with the best percentage price change over the last 52 weeks, expecting that momentum to continue. Others look for those that have lagged the market, believing those are the ones ripe for the biggest increases to come. Today, about 40% of household wealth is in the stock market which is about 20% higher than 2019 levels. Therefore, drastically increased M2 and increased interest in the stock market flushed the market with cash resulting in justification for a slightly higher valuation compared to the pre-pandemic times. If there is more money in circulation, the overall higher valuation of the market should be adjusted. Even when assuming fast tapering and rising interest rates in 2022, I think these immense levels of M2 growth will support some level of higher valuations throughout the stock market.
Apple Inc. designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide. The company serves consumers, and small and mid-sized businesses; and the education, enterprise, and government markets. Stash cannot and does not represent or guarantee that any of the information available via Refinitiv is accurate, reliable, current, complete or appropriate for your needs. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system.
Since 1988 it has more than doubled the S&P 500 with an average gain of +25.25% per year. These returns cover a period from January 1, 1988 through December 6, 2021. Zacks Rank stock-rating system returns are computed monthly based on the beginning of the month and end of the month Zacks Rank stock prices plus any dividends received during that particular month. A simple, equally-weighted average return of all Zacks Rank stocks is calculated to determine the monthly return. The monthly returns are then compounded to arrive at the annual return.
Only Zacks Rank stocks included in Zacks hypothetical portfolios at the beginning of each month are included in the return calculations. Zacks Ranks stocks can, and often do, change throughout the month. Certain Zacks Rank stocks for which no month-end price was available, pricing information was not collected, or for certain other reasons have been excluded from these return calculations.
While earnings are the driving metric behind stock prices, there wouldn't be any earnings to calculate if there weren't any sales to begin with. Like earnings, a higher growth rate is better than a lower growth rate. Seeing a company's projected sales growth instantly tells you what the outlook is for their products and services. As a point of reference, over the last 10 years, the median sales growth for the stocks in the S&P 500 was 14%. Of course, different industries will have different growth rates that are considered good.
So be sure to compare a stock to its industry's growth rate when sizing up stocks from different groups. Apple has proven successful in both its product offerings and performance in its respective industry. In addition to being the first publicly traded U.S. company to reach a trillion-dollar valuation in 2018, the company also maintains strong financials with widespread media recognition. As a reliably successful publicly traded companies, Apple also retains blue-chipstatus. However, stocks can be volatile, so it's wise to choose carefully before investing. StockInvest.us is a research service that provides financial data and technical analysis of publicly traded stocks.
All users should speak with their financial advisor before buying or selling any securities. Users should not base their investment decision upon StockInvest.us. By using the site you agree and are held liable for your own investment decisions and agree to the Terms of Use and Privacy Policy.Please read the full disclaimer here. The overall market sentiment and conditions for the most part of 2020 and 2021 justified high valuations. First, the market condition during the pandemic turned out to be great for Apple.
As people stayed home, they eventually spent more time online and realized the importance of connected devices driving Apple's hardware and software sales. Second, the government's aggressive fiscal and monetary expansion policy to sustain the economy boosted Apple's business and the stock. As the picture below shows, the Federal Reserve's quantitative easing allowed more money to flow into the financial markets creating general positive investor sentiments supporting higher valuations. Also, a record amount of fiscal policies seen during both the Trump and Biden administration brought increased sales and investments in Apple. Overall, these factors created a justification for higher valuations for the general market and Apple.
Apple's financial performance, including its share price, relies heavily on the sales of its products. A high flier through much of its recent history, Apple stock hit new all-time highs toward the end of 2021, with a market capitalization approaching a record $3 trillion. Apple also appears to be getting more Android customers to migrate to its ecosystem, noting that it saw strong double-digit growth in the number of people who switched in Q3. This is significantly positive, as Apple has done a good job locking in users and better monetizing them with pricier upgrades, new products, and services. While continued revenue growth and solid margin expansion should drive Apple's profits, shareholder returns could be magnified by Apple's massive stock buyback program. For perspective, the company has bought back an average of 5% of its stock each year over the last five years.
The tech giant, which was already the biggest company in the U.S. market, now accounts for just over 4% of the S&P 500 index. Even if you don't own the stock, there's a good chance you have indirect exposure to it, through mutual and exchange-traded funds you may own in a brokerage account or 401. We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
Cash is vital to a company in order to finance operations, invest in the business, pay expenses, etc. Since cash can't be manipulated like earnings can, it's a preferred metric for analysts. The new iPhone 12 handsets saw their first full quarter of sales over Q2 FY'21, helping iPhone revenue rise 65% compared to last year.
The iPhone is Apple's most profitable hardware product and the new handset is also priced at a premium compared to its predecessors, helping margins. For example, Apple says that it has about 660 million paid subscriptions on its platform now, marking an increase of 145 million compared to last year. Separately, Apple said that it also benefited from a favorable foreign exchange environment. My concern as an AAPL investor since 1999 is that AAPL is not in a price bubble that will burst and leave us with little value.
I want to see continue stock appreciation, but at a reasonable level that isn't the makings of a balloon ready to pop. I want to be holding AAPL shares 10 years hence, if possible, and liking it. But whether that is true or not depends on where people like you put your money. If everyone pulls money from AAPL all at once, we'll have a major problem for the market as a whole, since few funds these days lack AAPL as a holding. Mr. Bogle was the apostle of low-cost, diversified stock and bond mutual fund investing, mainly through index funds, which he invented in their first commercially viable form. Such funds are inherently cheap to run, he said, because they merely mirror the market and keep trading costs to a minimum.
Apple briefly became the world's first $3 trillion company today based on market capitalization, which is the total value of all of the company's outstanding shares. The milestone came after Apple's stock price rose over 40% in the last year. The impressive feat, which Apple achieved when its stock price reached the $182.86 mark during intraday trading, came just over 16 months after Apple be...
Whether you should purchase a share of Apple depends largely on your financial goals. With a 52-week high stock price of $233.47, and a low of $142.00, Apple has consistently demonstrated strong financials. However, you'll also want to accept the risk that comes with every investment. Though Apple has earned blue-chip status, its stocks are nonetheless susceptible to decline.
Therefore, when making investments, it's critical to spend no more than you can afford to lose. Apple's share price is determined by its bid-ask spread, which is the difference between the price that buyers are willing to pay and the price that sellers are willing to accept. Apple's price can fluctuate throughout the course of each trading day—when you buy Apple through Stash, we execute the market order during our next available trading window . At Stash, we don't recommend trying to predict the market when buying investments. We believe it can be a better strategy to buy quality investments you believe in, then hang onto them.
It is the largest company in the world and can still make money. Apple has an attractive valuation and there are still lots of opportunities to sell hardware. It is also adding more and more services and bundling them. It is a growing part of everyday lives and has increased relevance every day.
Easy money is coming to an end as monetary policy is shifting fast. First, the Federal Reserve is set to finish tapering by March of 2022, which is far earlier than expected. Second, the Federal Reserve's expected inflation rate in the coming years has risen. Inflation will slowly eat into the consumer's purchasing power and weaken the macroeconomics. Third, the Federal Reserve is expecting to increase rates as much as 3 times in 2022.
I believe these measures are clear proof of the rapidly changing financial market and the economy. Thus, I believe that Apple's upcoming performance combined with the negatively shifting underlying trend will not suffice bullish investors justifying today's high valuation. The tech giant generated tens of billions in profit last year, and is well on the way to doing the same this year despite facing slowing growth. An investor in her 20s, who could well be in the work force until 2072, might want to put 100 percent of her investment money into a broad stock market index fund and just add to it year after year.
Consider that since the start of 1976 , the S&P 500, including dividends, has returned more than 18,000 percent. Research is provided for informational purposes only, does not constitute advice or guidance, nor is it an endorsement or recommendation for any particular security or trading strategy. Research is provided by independent companies not affiliated with Fidelity. Please determine which security, product, or service is right for you based on your investment objectives, risk tolerance, and financial situation. Be sure to review your decisions periodically to make sure they are still consistent with your goals. Currently, the company is expected to earn $55 a share next calendar year.
Even at the current stock price of $636, that's a P-E on 2013 earnings of 11.5. That's actually slightly cheaper than the 12.6 P-E on the S&P 500, based on estimated 2013 earnings. Furthermore, Apple just started paying a dividend and yields 1.6%, just behind the 1.9% yield of the S&P 500. The stock has been a winner despite its recent decline, which briefly pushed it into a 10% correction.
At its close of $635.85 Tuesday, it's still up more than 50% this year, which compared with the 15% gain in the broad Standard & Poor's 500 index makes it a runaway winner. Analyst sentiment, which gives a good sense of a stock's future price movement, is good for AAPL. It has an average broker rating of 1.51, indicating favorable analyst sentiment. Of38 Wall Street analysts that rated the stock, 11 rated it a "Strong Buy." The consensus EPS estimate of $0.88 for the quarter ending March 31, 2021 represents a 37.5% improvement year-over-year.
Is Today A Good Day To Buy Apple Stock Moreover, AAPL has an impressive earnings surprise history, with the company beating consensus EPS estimates in each of the trailing four quarters. A consensus revenue estimate of $73.15 billion for the next quarter represents a 25.4% increase from the same period last year. During periods of economic uncertainty, investors start to focus increasingly on financial health.
