Apple’s Near a $3 Trillion Market Cap: Is it Right for You?
Apple (AAPL) is one of the best innovative tech companies around. However, its market cap is getting close to the $3 Trillion mark, and people must wonder if this is the right stock to invest in for your future.
Having a slice of the Apple company may do wonders to you. A couple of days ago, Warren Buffett’s stock holdings hit a record of $152 Billion in Apple stock. His investment of $31 billion continues to grow and surpass all his other companies.
Right now, Apple has the largest company by market cap in the world. When Apple’s stock price (AAPL) hits $182.86 per share, the company will have a market cap of $3 trillion. The next largest company would be Microsoft (MSFT), with a market cap of $2.43 billion.
Why Would Investors invest with Apple?
Since November 11th, Apple’s stock price has soared, and investors are trying to get a piece of the pie. This company is no ordinary company. It is a company that runs on innovation and excellence.
During the 4th Quarter, iPhone has increased in revenue 47% year over year to almost $39 Billion. The revenue has increased 29%, up to $83.9 billion. In addition, sales of the services Apple offers like Apple Music, Apple Pay, Apple TV+, and others have increased by over 25%.
For yearly revenue, Apple has reported combined sales of $365.8 billion, which is 33% higher than they took in 2020 at $274.5 Billion with gross margins up to 45%.
Most people think Apple is a company that has the iPhone and Macbook computers. However, this company always creates excellent products for its users that surpass most other companies.
A couple of years ago, Apple created the AirPods. AirPods are a simple Bluetooth earbud that can connect with your device. As of 2020, AirPods brought over $10 billion of revenue. That amount of revenue is more considerable than most tech companies. If you compare this with companies like Twitter (TWTR) or even Netflix (NFLX), you will see AirPods itself can bring in more sales. For instance, Twitter had revenue of $3.74 billion in 2020.
AirPods could be its own stand-alone sound company that brings in more revenue than Bose and JBL combined. That speaks volumes to Apple's products and how each product could be divested as its own company.
Apple is innovating, and you can see this through the new products they are getting ready to launch, such as the Apple Car and an augmented reality/VR set. These innovations give investors confidence that Apple is not just a phone company or computer software. Instead, they create and make more products that will dominate the new sectors.
Is Apple a Risky Investment?
With an almost $3 Trillion market cap and being the largest company in the world, you must wonder if it could all fall apart. That is not something you should worry about. Go to a coffee shop, gym, or mall and look at which devices people use.
Consumers usually use iPhones; they have AirPods in their ears and use MacBooks for business and work. So, it is hard not to see why the company brings in more revenue each year.
In the 4th Quarter of 2021, earnings have gone from $0.73 to $1.24 per share compared to the prior year. This company is working to bring in more revenue while creating value for its customers and shareholders.
If you think Apple is a bit riskier, there are ways to minimize the risk. You could invest in Microsoft (MSFT) as a less risky company. They have a stable subscription style business bringing them up as the second-largest company in the world. It is hard not to put these two companies together.
The other option is to find a nice index fund you can invest in, like VTSAX or VFIAX or another suitable Vanguard Index Fund. They can capture the stock market with less risk associated with owning a more significant portion of a single stock. Often, Apple stock is the number one investment for these index funds since they invest based on market capitalization. In this way, an investor can own Apple as part of a more diversified portfolio.
Is Apple Right for You?
Looking at the finances, you must wonder, is Apple right for me? The company continues to innovate and grow. Apple’s market cap is nearing $3 Trillion, and no one could have thought this was possible even a few years ago. Apple stock is not just a 10 bagger meaning that it is increased ten times but a rare 100 bagger twice over. If an investor had bought Apple stock in 2001 and reinvested the dividends, $10,000 would have turned into over $3.6 million.
In 2018, Apple hit a $1 Trillion market cap. It took two more years to double it. So far this year, the stock price has risen over 30% on top of the 80% the stock price rose in 2020. Now compare that to the S&P500, which has only increased 25%. In 2021.
Apple is a company to invest in at the right price. The company is innovative, has a solid balance sheet, and grows the top and bottom lines. Apple continues to grow behind a brand that means excellence and perfection. People may not always enjoy the price of the products, but you cannot deny they are built with quality and are in high demand.
Author Bio: Dividend Power is a self-taught investor and blogger on dividend growth stocks and financial independence. Some of his writings can be found on Seeking Alpha, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial blogs. He also works as a part-time freelance equity analyst with a leading newsletter on dividend stocks. He was recently in the top 1.7% out of over 8,182 financial bloggers as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.
Disclaimer: Dividend Power is not a licensed or registered investment adviser or broker/dealer. He is not providing you with individual investment advice. Please consult with a licensed investment professional before you invest your money.