Tuesday, July 23, 2013

Three Reasons to Invest in Apple Inc. (AAPL)

Although there are many reasons to invest in the great tech company that is Apple, I have narrowed it down to just three reasons.
  1. Simply looking at the fundamentals, Apple is trading at a major discount to its rival "tech-giant" competitors. Although Apple shares have fallen nearly 30% in the last year, the company is still extremely profitable and trades at just 10 times earnings. This is far less expensive than the technology industry average of 16 times earnings. In this bull market, value is hard to find, but not if you choose to invest in Apple.
  2. Additionally, Apple is still projected to grow at an average of 21% for each of the next five years, while the technology industry is only projected to grow at an average of 11%. The PEG ratio (PE/Growth) is useful in this situation to display Apple's value. Apple trades at a lower PE ratio and grows at a higher rate than the tech industry, therefore Apple's PEG ratio is .52. The PEG ratio for the tech industry is 1.34, which means that you are paying more for less growth, if you look past Apple.  
  3. Finally, Apple is one of the largest companies in the world, and now has $146 billion in cash! This money is just sitting there waiting to be returned to shareholders in the form of share buy-backs and increased dividend payouts. Apple currently yields 2.91% which is very impressive for a tech company. Consider that Google, Microsoft, IBM, and Oracle all fall short of a dividend that pays this much. Apple has announced plans to buy back shares which is good for two reasons. Apple believes that their shares are undervalued at these prices and will attempt to profit by selling them later. Also, by reducing the number of shares available to the public, the value of each one increases.
Thank you for reading, now carefully consider these facts and your investment objectives before investing
(Facts according to Yahoo!Finance)

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