In short and straight to the point, I chose Apple Inc. stock for my client to keep his investments safe. Apple’s success factor in all areas of their market is a major key for me to advise my client to buy their stocks and to be committed to Apple for long term. Over the decade you can see that Apple’s stock prices are either stable or they keep going high and higher. Another biggest factor is the consumer loyalty, they have not disappointment consumers with their product designs, innovation and deliveries.
Since their inception of their first product called iPod in 2007, they have established themselves into a most successful and market dominating companies in the world. Forbes ranked them as number one largest technology company. They are also ranked number 12 on largest traded company of the world. They are estimated to be around 1 trillion. They have the more than 190 billion dollars cash on hand. They have grown in company value from 22 million in 1996 to 1 trillion plus in 2019.
Their market cap is larger than Google, Microsoft, Amazon, HP and a lot more others. Between 1998 to 2019 their share have gone to touch the upward of $669. But they have spilt their stock about 4 times and the biggest spilt happened in June 2014 where people made a lot of good revenue. A lot of companies do not take this route if they are not successful or their products are not successful.
Between 2014 and 2019 Apple Inc. stock prices are between $90 and rose to $177 as of today. So during this time the earnings ratio for the investors have been great.
Every time there was innovation happened at the company and formed into a product the stock prices went up.
2) My client understands that trust between us is everything and this is why he takes the leap of faith in investing in my suggested stocks. But still in order to make sure of his are safe I will make my investor understand why investing in Apple Inc. is a rational decision. Most investors like to buy stock for long period of time and this stock is one of them. Other investors like to investor short term for short term gain.
After my careful analysis I have determined that my client would be more interested in long term stocks such as Apple Inc. He would like that it is lingering today at $177 per stock while few months back this stock was around $242 per stock. Apple Inc. faced couple of infringement lawsuits that made the stock go down really low at $152 almost two months ago. But now slowly and effectively it is coming back up. So, it is a medium risk stock right now with a potential of going back to $252 plus in recent months. According to Dierking, there are four benefits for holding onto long-term investments: Better Long-Term Returns, Opportunity to Ride out Highs and Lows, Investors are Poor Market Timers and Lower Capital Gains Tax Rate (2017).
My client is one of those personalities who like to play safe and play risky at the same time. So I think this stock is perfect for him. He is also a safe roller who likes to invest in long term stocks. I think he will gain at least a profit of around $65 plus by same time in next year. So he will be satisfied if he makes a double of the price allotted to this stock. He is a logical investor with a lot of patience and so he is a lot to gain as the new iPhone is to be release late this year. If technology wise there is innovation embedded in the new iPhone then it is bound to go up at least $65 plus range.
3) Apple Inc. has been a successful company for last decade and so they had increased their rate of return and increase stock prices over time. For investors to make the right choice, I looked at five financial ratios to be sure of my choice for my client. This will make my client understand my choice of apple far better than any other stocks. The financial ratios I used were working capital, earnings per share, debt-equity, and return on equity ratios. These ratios provide much better picture of Apple as a company and gives much bigger clarity of all my investor.
These calculations gave much clearer pictures of financial history, their production history, their inventory history and their cash on hand history. The working capital ratio was the best way to evaluate about the company. It pretty much determines that crucial things about the company. This basically tells you if you should invest in their stocks or not for long or short terms. Please see Apple has continued growth to see they’re over all aspects of the company.
Financials
| 2007-09 | 2011-09 | 2012-09 | 2013-09 | 2014-09 | 2015-09 | 2016-09 | TTM | |
| Revenue USD | 65,225 | 108,249 | 156,508 | 170,91 | 182,795 | 233,715 | 215,639 | 223,507 |
| Gross | 39.4 | 40.5 | 43.9 | 37.6 | 38.6 | 40.1 | 39.1 | 38.5 |
| Operating ncome | 18,385 | 33,79 | 55,241 | 48,999 | 52,503 | 71,23 | 60,024 | 59,985 |
| Operating Margin % | 28.2 | 31.2 | 35.3 | 28.7 | 28.7 | 30.5 | 27.8 | 26.8 |
| Net Income USD Mil | 14,013 | 25,922 | 41,733 | 37,037 | 39,51 | 53,394 | 45,687 | 46,651 |
| Per Share USD | 2.16 | 3.95 | 6.31 | 5.68 | 6.45 | 9.22 | 8.31 | 8.83 |
| Dividends USD | 0.38 | 1.63 | 1.81 | 1.98 | 2.18 | 2.34 | ||
| Payout Ratio | % | * | 27.4 | 28.5 | 22.3 | 24.8 | 26.5 | |
| Shares Mil | 6,473 | 6,557 | 6,617 | 6,522 | 6,123 | 5,793 | 5,5 | 5,304 |
| Book Value Per Share | 7.45 | 11.78 | 16.99 | 19.60 | 20.62 | 22.53 | 23.71 | 25.64 |
| Operating Cash Flow | 18,595 | 37,529 | 50,856 | 53,666 | 59,713 | 81,266 | 65,824 | 64,068 |
| Cap Spending | -2,121 | -7,452 | -9,402 | -9,076 | -9,813 | -11,488 | -13,548 | -12,833 |
| Free Cash Flow | 16,474 | 30,077 | 41,454 | 44,59 | 49,9 | 69,778 | 52,276 | 51,235 |
| Free Cash Flow | 2.54 | 4.59 | 6.31 | 6.46 | 7.73 | 11.82 | 8.97 | |
| Working Capital | 20,956 | 17,018 | 19,111 | 29,628 | 5,083 | 8,768 | 27,863 |
Key Ratios
| Efficiency | 2011-09 | 2012-09 | 2013-09 | 2014-09 | 2015-09 | 2016-09 | TTM |
| Day Sales outstanding | 18.34 | 19.01 | 25.66 | 30.51 | 26.79 | 27.59 | 19.69 |
| Days Inventory | 5.17 | 3.26 | 4.37 | 6.30 | 5.81 | 6.22 | 6.61 |
| Payables Period | 75.48 | 74.38 | 74.54 | 85.45 | 85.57 | 101.11 | 77.33 |
| Cash Conversion Cycle | -51.96 | -52.13 | -44.50 | -48.64 | -52.97 | -67.29 | -51.03 |
| Receivables Turnover | 19.90 | 19.20 | 14.22 | 11.96 | 13.62 | 13.23 | 18.54 |
| Inventory Turnover | 70.53 | 112.12 | 83.45 | 57.94 | 62.82 | 58.64 | 55.23 |
| Fixed Assets Turnover | 17.26 | 13.48 | 10.67 | 9.82 | 10.85 | 8.71 | 8.16 |
| Asset Turnover | 1.13 | 01.07 | 0.89 | 0.83 | 0.89 | 0.70 | 0.69 |
(Apple Inc., n.d.)
From the above chart you can see it is easy to make sure that investor understand that their investment will be very safe for long- or short-term investments. of the financials over the years, it is evident that the company has had years that are more successful. The only thing is not included in this is the changes that happen in the economy.
4) I understand after looking at the five different ratios I understand my client might have other concerns and be still reluctant in investing these stocks. So few strategies I can use to pursue my client is to show him the power of the innovation that Apple banks on every day. They also take the pride in having the best production lines for their products and have their quality assurance processes are immaculate. They are a self-sustained company with all the resources needed to run their company. They have shown us in last decade that they can create new products and keeps the market afloat with their innovation. Their capability of creating new products are derived from being a technology company rather than be a product company. According to Scott Turner, “Diversification spreads risks across many securities or stocks, so those that perform well offset those that do poorly. Though diversification protects you from devastating losses, it also costs you in average annual returns (2017).” Diversification is virtually another idea that will make sure that he understands that his investments in order to decrease risk. This will allow the investors to set out their investments to reduce the risk that could come from the Apple stock severely dropping in value suddenly. Diversification will also help with the possible lack of innovation at Apple causing the company to fail.
5) Investing in the Apple Inc. is a bit risky to me, seems like a great long-term investment as well at the same time. I merely come to this conclusion because they are well established and financially stable company. They have about 100 billion in cash and their mindset about other equitation’s makes sense for long term. So, I wouldn’t mind making mine or others investment in Apple.
So, after the overall analysis I am completely satisfy that the risk to invest with Apple is to be satisfactory and not risky at all. The company in the last decade has done more work than harm to its shareholders or as a product owner. In other cases, they have made a considerable leap in their technology and their products. They have become one of the most powerful companies in the world with a lot of lobbying of The overall risk associated with the Apple Company is reasonable. The company has proven over the years that the company can be successful regardless of the difficulties that may occur. Apple Inc. is a powerhouse in the tech market and has been an overall stable stock in the stock market. This will increase the value of the stock and this is a perfect time to invest.
References
- Krantz, Matt. “How Investors Should Play Falling Apple Stock.” USA Today. Gannett, 10 Aug. 2015. Web. 22 Aug. 2015.
- McWhinnie, Eric. “5 Reasons Why You Should Still Buy Apple Stock Today.” The Cheat Sheet. N.p., 01 Aug. 2015. Web. 22 Aug. 2015.
- Zucchi, Kristina, CFA. “Investing In Apple: The Risks & Rewards (AAPL).” Investopedia. N.p., 18 Feb. 2015. Web. 22 Aug. 2015.
- Auerbach, A. (2005). How to analyze your business using financial ratios. Business Builder. Zions Bank, Edward Love Foundation
- Apple Inc. (n.d.). Retrieved June 01, 2019, from
- Birger, J. (2012, December 06). Why you’re right to be obsessed with Apple stock. Retrieved September 02, 2017, from
- Dierking, D. (2016, May 22). 4 Benefits of Holding Stocks for the Long Term. Retrieved September 02, 2017, from
- Turner, S. (2017, February 14) Diversification Is Important In Investing Because·. Retrieved September 03, 2017, from
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