00:00 Should you buy Apple stock? So far in 2022 Apple stock has outperformed its rivals.
00:06 Shares are down only 15% year to date while Alphabet is down 37%, Amazon is down 42% and
00:13 Meta is down 72%. Right now the company has a market cap of $2.43 trillion with $48 billion
00:20 of cash including $25 billion in marketable securities. For perspective Apple's market cap
00:26 is bigger than the GDP of Canada. Over the last 12 months the company made $394.3 billion in
00:32 revenue, $99.8 billion in net income and $6.11 earnings per share. Revenue was up 7.8% year over
00:41 year, net income was up 5.4% and thanks to a strong buyback scheme earnings per share increased 9%.
00:48 That means Apple stock is now valued at 6.4 times revenue and 25 times earnings. The company also
00:55 pays a dividend of 0.6% and it repurchased $89.4 billion of its own stock. In last week's annual
01:02 report Apple showed healthy product sales for 2022. iPhone sales were up 7.2% to $206 billion,
01:09 Mac sales were up 14% to $40 billion, wearables were up 7.3% to $41 billion,
01:16 services were up 14% to $78 billion but iPad sales were down 8% to $29 billion.
01:22 Considering Apple's dominance it's not surprising to see its stock outperform. Apple is also seen
01:27 as a relative safe haven versus volatile growth stocks, crashing bonds and foreign markets.
01:32 However there are also risks to owning Apple stock. US China trade relations are disrupting
01:37 Apple's manufacturing. In one example the company has had to halt its plan to use China's YMTC
01:43 memory chips and tensions like these show no sign of easing. Also Apple's PE ratio at 25 is still
01:50 30-40% above its long term average. That would be ok if Apple was growing quickly but as we saw
01:56 Apple grew revenue only 7% in 2022 and net income only 5%. Furthermore Apple's sheer dominance will
02:04 draw the attention of regulators. That said Apple maintains a strong brand and its earnings per
02:09 share is supported by buybacks. Assume that Apple grows earnings per share 10% a year for the next
02:15 10 years then trades at 25 times those earnings we get a share price of $396 in 10 years time.
02:23 That equates to an annualised return of roughly 10.5% per annum including dividends.
02:29 All in all Apple is clearly a quality company but it looks fairly valued. That's why I give
02:34 the stock a neutral rating and I do own shares in Apple. But these are my own personal opinions
02:39 not financial advice. For more detailed analysis visit our website.
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