Apple still looks like an impressive long-term bet.
Apple (AAPL) has remained a lucrative investment for long-term investors, though the stock lost 23% in YTD. The decline emerged as market players stayed concerned about escalating inflation as the aggressive efforts by the Fed Reserve to cool it down through funds rate hike.
AAPL’s price plunge, plus pessimism surrounding the marketplace, have investors wondering whether Apple is still a worthy investment. Analysts support buying more shares by the tech company now. Here is why.
Massive Cash to Overcome Any Storm
Some investors avoid tech stocks for now since most of them are not profitable and might take years to attain profitability. There isn’t such a narrative in Apple. The latest quarter ended with the company boasting $193B cash (on hand). Furthermore, Apple’s leftover amounted to $73B after accounting for its debt.
Apply remains lucrative as investors hunt for lucrative firms that might persevere a possible economic meltdown.
Surging Service Revenue
Apple has a successful service business. The company’s Q2 results show services income gained 17% Y/Y to a remarkable $19.8B. The revenue accounted for over 20% of Apple’s overall sales. Moreover, the tech giant boasts 825M service subscribers, indicating a 25% surge within the last 12 months.
Apple already boasts enviable gross margins of about 44%, though its service margins remain far better, at around 73%. Also, investors need to consider that the company has more opportunities within the services sector, including possible subscription plans for devices such as iPhones.
Multiple Potential New Products
Bloomberg’s May reports suggested that Apple revealed an AR (augmented reality) and VR (virtual reality) headset to the board of directors. The company has concentrated on AR within the last several years with iPhone applications, but AR devices might mean an impressive step towards a new category.
Presenting the device to the board might mean the company is ready to release it soon, possibly by the coming year. Katy Huberty, Apple’s analyst, estimated that a VR/AR device might see the company’s revenue surging to $29 billion by 2026.
Though these might seem mere estimated on a possible device, the company seemed ready to introduce the product. Tim Cook, Apple’s CEO, alerted the crowd to remain tuned for what the company prepares in the AR sector.
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