AAPL Stock Rumors, Price Prediction, Analysis

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Let's talk about the largest stock in the S&P 500 – Apple (AAPL) – up 15% YTD, and most of that happening in the past month. Basically, Apple has had a slow start to the year, but has been on a tear lately. So, as always... what's driving this? what is the fair value price for the company? ...and of course, should we buy, hold, or run?

#aapl #apple #stock #invest

My view of Apple's moat is its customer loyalty. As a matter of fact, in a survey by sellcell, 92% of iPhone users said they'd buy another iPhone when it's time for an upgrade (up 1% from 2019). That is a crazy number! Just for perspective, 26% Samsung users said they'd swap out of the brand for their next upgrade – that's 12% more people than 2019.

Part of Apple's loyalty, in my opinion, is by design. The integration between your iPhone, Apple Watch, Apple TV, AirPods, Apple Pay, iMessage, iCloud, etc. creates a high switching cost. I can speak for myself on this one... I'm comfortable with my iPhone. I don't want, or need, to switch. The amazing part is that Gen Z and Gen Alpha seem to carry this brand loyalty as well.

Aside from actual product releases, like Apple Pay Later (just announced), there's a lot of rumors around Apple's next big product innovation. They're usually a bit more than rumors, because there is actual R&D happening at Apple to support it: Apple Car, Apple Headset, Apple Healthcare.

But aside from all the big rumors, there's little add-ons to its existing suite of services that can collectively boost revenues from the massive ecosystem. For example, allowing users to buy/sell stocks from its Stocks app could easily take market share from apps like Robinhood and WeBull. Apple doesn't have to be the first-t0-market. It doesn't care to be... but it cares to be the best.

I was able to come to a fair value of Apple stock at $160 – a 9% upside from where we are today. I assumed Services and Wearables would continue to increase at 5% YoY which would drive much of the growth and increase margins by 1% overall. Overall growth slowed to 8% in 2022-2023, and 6% in 2024. Of course, there is risk to these assumptions as growing when you're the size of Apple is not easy. However, we can be certain that the iPhone upgrade supercycle of 2020 is likely not something to continue.

The issue, however, I have with the price of Apple stock is that it is trading at high premiums relative to it's own history. But, that's the case for most stocks right now. Factoring in a compression of valuations, I get a price target of $140 - a 6% downside from where we are today.
Risks

The main risks to the stock today IS Apple's inability to continue to innovate (but a huge upside if they do), Antitrust legislation preventing Apple's integrated ecosystem to grow, and High market valuations.

The stock is HOLD for me. I really like the company, but I am just cautious of entering now with its recent run ahead of earnings. The valuation is stretched relative to history, though you can (like I did) make the case for it being undervalued. I think owning Apple is a no-brainer, and you can't go wrong with it.

But, I will never say something is too big to fail. Apple just need to continue to innovate and provide integrated services to its loyal user base and the company will continue to be a part of culture. But, of course, hold at your own risk 😉

I do think it's prudent to trim positions and take profits here – which, in full disclosure, is something I have done.

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Видео AAPL Stock Rumors, Price Prediction, Analysis канала Bill Hawk