When it comes to splurging on stocks, Warren Buffett isn’t exactly known for extravagance. The legendary chairman of Berkshire Hathaway prides himself on unearthing undervalued gems and nurturing them for the long haul. In the first quarter of 2016, Buffett deftly added a top-tier technology and consumer goods behemoth to his portfolio – and fast forward to today, the stock has surged a staggering 600%.
I’m referring to none other than Apple (NASDAQ: AAPL). If you’re yet to hop on the bandwagon and acquire shares of this corporate juggernaut, you may be grappling with the apprehension of missed opportunities. But what if I were to divulge that, given the company’s long-term potential, the shares are still a steal? Brace yourself, for this Warren Buffett stock harbors the immense potential to skyrocket your net worth over time.
Apple’s Earnings Trajectory Throughout Time
Apple, the company, is about as ubiquitous as the fruit it’s named after. Renowned for its iconic iPhone and Mac, along with other globally sought-after devices, Apple has not only witnessed an upward trajectory in earnings over the years but has also excelled in pivotal financial metrics like free cash flow and return on invested capital.
In the most recent quarter, Apple’s earnings per share soared to an all-time high of $2.18, marking a robust 16% increase. The company also announced that services revenue had reached a record peak. The burgeoning services sector is a direct consequence of Apple’s installed device base swelling to over 2.2 billion – an all-time high. More active devices equate to a broader scope for Apple to vend services to users – ranging from cloud storage to digital content.
Despite encountering hurdles such as heightened competition in China from local rival Huawei and pressures from foreign exchange rates, Apple has emerged as a beacon of both growth and stability. This is owed to the impressive earnings mentioned earlier and the company’s generous dividend payout – a rarity in the tech domain.
Unveiling Fresh Apple Admirers
In addition, Apple remains successful in luring new users. For instance, in the past quarter, nearly two-thirds of Apple Watch purchasers were new to the product. Approximately 50% of iPad and Mac buyers were also fresh entrants into the Apple ecosystem. Furthermore, Apple’s sustained efforts to bolster its device user count now furnish a fresh revenue stream – courtesy of the services retailed to them. As previously highlighted, services revenue has surged to record-breaking levels, imprinting the company’s transition to a continual revenue model.
Now, let’s turn our attention to Apple’s share price. Despite a commendable surge of over 20% in the past year, the valuation remains rational. The stock trades at roughly 29 times its trailing-12-month earnings, more than double its valuation at the time of Buffett’s initial investment. However, it’s crucial to note that revenue has considerably ascended since then, culminating in a record array of devices propelling substantial growth in services revenue.
The Apple of today differs substantially from the Apple of 2016. With brighter growth prospects, the stock continues to appear as a bargain for the patient, far-sighted investor. This is precisely why this cherished favorite of Warren Buffett’s holds the potential to amplify your fortune in due course – even if you’re contemplating diving into the stock at this juncture.
Should you invest $1,000 in Apple right now?
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