Apple is one of the most innovative companies in the world today. They are best known for providing consumers with a range of quality products, including the line of iPhones, iPads, and computers. Along with the success that they have had with their line of consumer products, Apple has also made a lot of money and has provided investors with a great return on investment over the past decade. So, at this point the question rises: should you invest in Apple stock?
While Apple has continued to be one of the top performing stocks in past years, it could still provide investors with plenty of upside. When you are thinking of investing in Apple, there are several factors that need to be taken into consideration. This article will provide you with a guide that will help you decide if investing in Apple is right for you.
Apple: Current Financial Position
One of the main reasons why people are attracted by Apple stock is the financial position that the company is in today. Many of the top tech stocks today are based on the anticipated success of products in the future. In some of these cases, the valuation does not seem to take into account the current financing position when new tech firms are still operating at a loss.
While any still consider Applean innovative firm, they are among the wealthiest companies in the world. They currently have more than $250 billion on their balance sheet. This makes them one of the most cash-rich companies of all time. Having this level of liquidity at their disposal should provide the company with a range of different opportunities to invest in new product lines. This could bring the company more revenue streams in the future. Consequently, this could improve the stock value even more.
Analyst Predictions on the Apple Stock
When looking to invest in Apple stock, it is also worthwhile to consider the opinion provided by top stock analysis. These experts dedicate much of their time to analyzing financial statements and business plans to determine what the appropriate price targets should be.
- As of June 2017, a share of Apple stock had been trading for around $155 per share. This is an enormous increase from even earlier in the year when Apple was trading closer to $110 per share. Furthermore, over the past several years, a share of Apple stock has gone up by more than 100%.
- Apple has gone up in value a lot over the past few years. But many experts believe that there is still some room for improvement.
- The latest analyst reports have predicted that Apple could increase in value to more than $200 per share. This is based largely on reports of the expected success of the iPhone 8, which will be released to consumers in the fall of 2017.
Ending the Debate: Should You Invest in Apple Stock?
Buying Apple Stock: Dividends
While there is a lot of room for potential stock increases in the future. So many investors will also be attracted by the level of dividends that Apple pays out. Unlike many other tech companies, Apple pays out a quarterly dividend to shareholders. These dividends can then be either reinvested in new stock shares of Apple, or they could be taken as cash.
The current dividend yield provided by Apple also is increasing each quarter. Over the past few quarters, the company has seen a steady increase. Therefore, it is now paying a dividend yield of close to 3%. When you choose to invest in Apple stock, the quarterly dividend payment will only provide more of a return on your initial investment.
The Impact of Stability
While there is potential for making a good solid return in the future on Apple stock, those that are looking to invest in the next company to provide 100% returns should probably look elsewhere. At this point, when you invest in Apple stock, you will likely receive a strong return over time. However, due to the stability of the company, it probably will not see major increases in the near future.
If you are looking for the highest reward possible, and are willing to take on the risk, it would be wiser to invest in earlier-stage tech firms. These provide much more room for gain. However, you should be aware that these stocks are also very risky.
Level of Risk Tolerance
While there is clearly a lot of benefit that could come with investing in Apple stock, you must also consider your risk tolerance before investing. Similar to when you invest in any other stock, when you invest in Apple stock, you are taking on a lot of risk. Whenever you invest in one company, there is a chance that the company’s stock value could take a big hit. There a variety of reasons that this could happen. This list includes:
- Loss of key company leadership;
- Poor sales from new product line;
- Changes in consumer behavior;
- Any other range of risks.
Since there is a risk that comes with you invest in Apple stock, it would be wise to take steps to mitigate this risk. One of the most simple ways to do this is to buy Apple as part of a diversified portfolio. Apple may seem like a sure-thing to invest in due to the recent returns on investment. However, you should ensure that you do not allocate more than 10% of your investment portfolio to any one stock, including Apple. You should instead focus on investing in a range of different companies across several different sectors. This will help to protect your capital in the event that the stock price moves against you.
To Sum It Up
Investing in the stock market and successful companies is one of the best ways to build long-term wealth. When you are looking for companies to invest in, one of the best companies to consider investing in is Apple.
Apple has been one of the top-performing stocks over the past decade and could provide valuable returns in the future. Prior to making the decision to invest in Apple stock, there are several factors that you should consider and we mentioned them above. Take them into consideration, and decide upon your investment!
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