Is Apple Stock a Buy Right Now?
Key Points
Apple is trading 31% higher this year, double the second-best-performing "Magnificent Seven" stock.
It keeps raising prices for its products and services. Folks keep paying.
Apple isn't cheap at 40 times trailing earnings, but that doesn't mean it will get cheaper.
In a market ripe with opportunities after seeing so many growth stocks implode this earnings season, Apple (NASDAQ: AAPL) is thriving. The consumer tech giant hit another all-time high on Thursday.
Is it too late to buy into the icon that is back on top of the market cap hill? Let's size up why Apple is connecting with investors right now, and why it might not be too late to buy the class act of Cupertino.
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Defying gravity
Bears may argue that Apple stock doesn't belong here. It's been a laggard in the AI revolution. There's a new CEO who has to prove himself worthy. Apple has delivered double-digit revenue growth in just four of the past 16 fiscal years. Spoiler alert: Apple belongs. It's comfort food for growth investors.
Apple just capped off one of those four fiscal years in which it posted double-digit top-line growth. It just topped 20% in normalized net margin for the first time since fiscal 2012. Apple is also getting folks to pay higher prices for its products.
Apple introduced the iPhone Duo, priced $700 more than its most expensive smartphone. It raised prices for Apple TV+ this summer. The streaming video service now costs three times as much as it did when it launched seven years ago.
Apple commands a premium on its products and services. It's only fair that it does the same as an investment. It is a rich valuation. Apple trades at 40 times trailing earnings and a still-steep 38 times forward earnings. The valuation is a bit stretched, but the only time you're going to get Apple at a bargain is when it stumbles.
With a new CEO who has everything to prove, that's not likely to happen. Apple is a buy right now, even at today's elevated price.
Rick Munarriz has positions in Apple. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.