Stocks are a great asset type for building lifelong wealth, according to every investor. Compounding can provide amazing outcomes. Certain S&P 500 companies have crushed the market. Consider Apple (NASDAQ: AAPL). Since going public in December 1980, the iPhone maker has returned 170,000% to stockholders. That huge gain makes a $1,000 investment worth $1.7 million today.
Apple is one of corporate America's biggest success stories, therefore it's worth studying its ascent. Next, we may decide if consumer discretionary stock is a good portfolio addition today.
Globally valuable company Apple is currently worth $2.7 trillion. Only Microsoft has a bigger market cap. A company cannot reach that valuation without doing something properly. Due to Apple's historically high sales and net profitability, its shares have benefited favorably.
This business's extraordinary brand power, which protects its economic moat and keeps competitors at bay, is maybe its most essential factor. Apple can set prices by selling popular hardware gadgets that users adore.
In terms of hardware innovation, this company may be unmatched. The iPhone may be the greatest product introduction ever, financially and socially. This proficiency has extended to Apple's hardware and services. Apple may be American, but it's a worldwide icon. In fiscal 2023, most revenue came from abroad. This indicates its widespread consumer appeal.
Do you want Apple stock now? Even recently, Apple shares have done well. The stock has risen 249% in five years, outperforming the Nasdaq Composite Index. Warren Buffett loves Apple, thus Berkshire Hathaway's portfolio has 43% of it.
With the stock down 12% from its top price at the end of last year, is Apple a good buy? I don't recommend investing in this company. This position is important to me for two reasons.
First, Apple's growth outlook. Today, this company is very mature. It still depends on the iPhone's popularity to keep people upgrading their handsets, even though new capabilities may not be as game-changing as a decade ago. The services division is growing sales. Apple's fiscal 2023 revenue fell despite that. No breakthrough product is likely to boost income for the company.
Apple's present valuation suggests limited return potential. Purchase the stock at 27.3 times earnings today. Having a competitive advantage and high profitability justifies that premium. I think it's an expensive entry point that decreases Apple's chances of outperforming the S&P 500 in the future.
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