Last Updated: May 5, 2021
Did you know that Apple’s (NASDAQ:AAPL) revenue for fiscal 2020 was $274,515 billion? October’s release of iPhone 12 and iPhone 12 Mini has further boosted sales, and at the beginning of 2021, the company posted a record quarterly revenue of $111.4 billion. The robust financial performance has affected Apple’s stock price, too. The shares have almost doubled in value during the past year.
Doesn’t that sound apple-ing? Are you now thinking about how to buy Apple stock?
We’ll shine a light on the company’s history and strategy, the benefits, risks, and steps of buying Apple stock. So read on!
Let’s first take a look at Apple’s success story.
On April Fools’ Day 1976, college drop-outs Steve Jobs and Steve Wozniak, along with their partner Ronald Wayne, founded Apple Computer. Although it started in Jobs’ family garage in California, the business was certainly not a joke.
With both Jobs and Wozniak young and pretty-much broke, Wayne feared that the financial burden of the venture’s development would fall on him. So he left only 12 days after incorporating Apple, selling his 10% share to Jobs and Wozniak for just $800 (around $3,645 in today’s money). If he had held onto it, his stake would be worth $200 billion now.
How much is apple worth now?
As of 2020, Apple Company’s net worth was an impressive $65 billion, while its market value reached $2.08 trillion.
The Apple I computer went on sale in July 1976. The $666.66 device wasn’t met with high demand. Only around 200 were sold. If people only knew back then that in 2019 a still-working Apple I would be sold for $1.75 million.
Following Apple II and Apple III’s launch, the company’s profits and size began growing at a fast pace. By 1980, Apple netted over $100 million and had more than 1,000 employees.
IPO and stock performance
The natural next step for Apple was to open its doors to shareholders. The company’s initial public offering (IPO), the biggest since that of Ford Motor Company in 1956, took place on December 12, 1980. The shares, trading on the NASDAQ exchange under the AAPL stock quote, were priced at $22 apiece.
During the Christmas season in 1989, Apple experienced its first decline in sales, which ultimately led to a 20% drop in AAPL stock price. In the 90s, the company tried to win back some market share with different products such as digital cameras, video consoles, portable CD audio players. But that didn’t turn out to be a winning strategy, and stock prices continued to decline.
In August 1998, Apple presented the first iMac computer that had a unique design and featured modern technology. In the first five months, the company sold 800,000 of them. After this turning point, Apple stock prices rose tenfold between 2003 and 2006, from $6 to more than $80 per share.
In 2012, the Apple share price pushed the company’s market cap to a whopping $624 billion, surpassing Microsoft’s record from 1999.
Growth continued in the following years, increasing the value for investors, especially those who bought Apple stocks at the moment they were released to the public. According to estimates, Apple’s 1980 IPO has created 300 millionaires. If you had bought 10,000 shares at the time, you’d have just over $11.5 million in 2020.
Apple’s Stock Splits
Apple’s stock has split five times since the company went public. In the table below, you can see the exact dates and ratios.
|06/16/1987||Two for one|
|06/21/2000||Two for one|
|02/28/2005||Two for one|
|06/09/2014||Seven for one|
|08/31/2020||Four for one|
Should you Invest in Apple Shares?
At the very beginning, Apple wasn’t a company that appeals to investors. But since 2007, it certainly has become one. It had its ups and downs and was near bankruptcy, but it pulled through.
Are you considering buying stocks in Apple? Before deciding, there are several considerations to make:
Do your homework
Being a customer of a particular company doesn’t provide the same knowledge as being an investor. Successful investors spend a lot of time researching revenue, earnings per share, and net income (quantitative research) and assessing the competition, management, and money flow (qualitative research).
You can take a look at Apple’s quarterly and annual reports, which will provide vital information on the company’s activities, financial results, incomes, and expenses. You can also review valuation metrics such as Apple’s P/E ratio, growth rate, and dividend yield (we’ll further discuss some of them further down).
The company’s annual and quarterly reports are available on Apple’s investor relations webpage. Additional information and independent analysis are also worth your time when wondering how to buy Apple stock.
The shares have proven to be a profitable investment in the long run, while the future growth perspective is quite optimistic, too. But you should bear in mind that the stock market is volatile and holds certain risks. Make sure you’re well-informed before buying Apple stocks.
Is AAPL Good for Your Portfolio?
Before you buy AAPL stock, think about asset allocation and diversification. Spreading your capital over multiple industries, companies, and geographical locations can lower the risk of losing all the money.
Also, consider whether the Apple stock is a good fit with your other investments. Some investors who buy Apple stock purchase it as a package of an index fund — a collection of assets. Apple is a part of the S&P 500 index.
How Much Money Can You Invest?
After you’ve considered what you want your trading portfolio to be, you have to think about the amount of Apple stock you can buy.
Beware that purchasing many Apple shares may not be the best choice for you. Take into account your financial situation and the other investments in your portfolio. Also, contemplate:
How will the investment influence the balance of your portfolio?
As we’ve mentioned above, try to have a range of different investments, meaning not to have a lot of funds in one industry or company. A popular rule you could apply is not to have over 10% of your entire portfolio in a single stock.
Do you have enough savings?
The stock market presents both quick gains and long-term investment opportunities. No matter your objective, you should make sure your investment won’t prevent you from meeting your everyday needs and even emergencies. Experts recommend having enough money for three to six months for living expenses. So the amount you invest into Apple stocks shouldn’t shake that balance.
What’s your investment plan?
Dollar-cost averaging, or DCA, is an investment strategy where investors split the overall amount of money to invest periodically. When you decide it’s the right time to invest in Apple stock, do it, but know that you don’t need to spend all your funds in a single purchase.
Does Apple pay dividends?
If you’re looking to tap into the Apple dividend yield, it’s important to know the latest payback was in February 2012 and amounted to $0.205 a share. The total size of your investment will determine the premium you receive as an investor.
How to Buy Apple Stock — A Step-by-Step Guide
If you’ve already made a decision, use these step-by-step instructions on how to invest in AAPL stock:
Step 1: Find the best online broker — Things to look for when choosing a broker are:
- Easy-to-use platform
- Simple account opening procedure
- Commission-free trading options or competitive fees
- Tools and research material availability
- Safety and security
And here are some of the top brokers with which you can purchase Apple stocks:
Step 2: Open an account — After you choose a broker, you have to open an account on their website. With some platforms, registration requires you to provide only an email and password. Others ask you to fill out forms with more details, which could be a safer way to buy Apple stock online.
Step 3: Verify your ID — To use the brokers’ website, after registration, you have to verify that it is really you who opened the account. To do that, you can provide your passport, driving license, or some other ID document.
Step 4: Choose withdrawal options — Brokers provide the same payment options for deposit as well as for withdrawing the funds.
Step 5: Deposit the funds — Depositing money is easy. You can do it with credit or debit cards. Also, typically you can deposit money via wire transfer, PayPal, or Neteller.
Step 6: Learn about trading and prices — Before you start trading, inform yourselves about the market and Apple stock price oscillations.
Step 7: Pick a good entry point for buying a stock — After you learn about the market and Apple’s share price, you have to assess when it is the best moment to buy AAPL stock.
Step 8: Invest wisely — It’s safe never to invest money you cannot afford to lose. For this part, you can use expert investment advice.
Step 9: Place a buy order — Once you go over all steps outlined, you’ll be ready to start trading. You could use demo trading accounts that some brokers offer, and exercise buying and assessing the best entry points for practice.
Is it a Good Moment to Buy Apple Stock?
According to the IBD Stock Checkup Tool, the Apple stock has a Relative Strength Rating of 85 out of 99, which means that it is among the top 15% of stocks regarding the performance over last year. In addition, the AAPL stock has a Composite Rating of 90 out of 99, where growth stocks that have 90 or higher are considered the best ones.
Although a valuable indicator, these ratings don’t necessarily mean the moment is right to invest in AAPL stocks. Let’s discuss some other factors.
Is Apple Stock Overvalued?
The Apple stock price today, March 18, 2021, is $122.45.
While becoming more affordable after the latest split-adjustment, the stock price of Apple has been outperforming the overall market for a while. The general opinion is that the company is currently overvalued, and here are the metrics showing that:
Apple’s price per sales (P/S) ratio is 7.37 as of March 2021. This marks a significant increase from 2019’s level of 4.09. So is Apple a good stock to buy now?
Indicating how much investors are paying for the stock per dollar of the company’s sales, the P/S ratio is preferred to be lower. Yet, other large tech companies also have this metric high. For example, Facebook’s is 9.03.
The price per earnings (P/E) ratio is one of the more important indicators of a company’s performance. Apple’s is 32.95, suggesting that investors expect higher growth from the company compared to the overall market.
Currently, Apple’s current price/earnings to growth (PEG) ratio is 2.68, which could also mean that the AAPL share price is above its fair value.
Analysts Predictions for Apple
In the opinion of 37 analysts who took a survey on CNN and provided a twelve-month price forecast, Apple has a median target of $133.00. This represents a 3.83% increase from the last price of $128.10. The experts’ high projection is $160.00, while the low is $74.10.
So, is Apple stock a good buy? Well, as per the current consensus among 42 polled analysts, Apple is a buy. This rating has held steady since February 2021.
Apple is the world’s largest publicly-traded company. With an impressive history beginning in Steve Job’s family garage, the tech giant has done more than producing computers and handsets — it has developed a brand and counter-culture.
You, too, have witnessed the Apple frenzy, and now that you now know how to buy Apple stock, you can join it as an equities investor. Just make sure you’ve done your research and weighed up the potential risks and benefits.