Buy Apple stock at record height before Q1 earnings?

Apple AAPL stock helped Nasdaq to a new high this week and the company reached its own record on Friday, releasing its first-quarter FY2021 earnings results on Friday, January 27. Apple has jumped about 30% since the end of October. And analysts are high on its latest iPhone.

Continued dominance

Apple needs no introduction as it continues its continued expansion into services and more beyond iPhones. But despite its successful diversification, its flagship smartphones still play an important role in the company and Wall Street, and account for 50% of total revenue in FY 2020.

Luckily, Wall Street is high on its first 5G-capable iPhone which was launched in October. The iPhone is available in four models at various price points. Despite the new features and its 5G capabilities, Apple has priced its high-end model to be the same as last year’s iPhone 11. And Morgan Stanley analyst Katie Huberty called the iPhone 12 “Apple’s most successful product launch in the last five years”.

Apple has also benefited from sales of Macs and iPads during remote work and school environments. And its Wearables unit, which includes its smartwatches and popular wireless headphones, grew by 25% last year to top a 16% expansion of its flagship service unit.

Apple now has subscription services such as its larger App Store, Spotify Spot competitor Apple Music, as well as its streaming TV service, which one day hopes to compete with Netflix NFLX and others. The company also has a news offering, video gaming and more.

Apple’s paid subscriptions grew more than 35 million sequentially from more than 585 million paid subscriptions to its various services in the last quarter. And officials were expected to reach a total of 600 million before the end of the 2020 calendar year.

Before proceeding, it is also worth remembering that Apple is pushing more to bring its in-chips home. The move is anticipated to help cut costs and improve battery life and performance, as it continues to close the loop diversely. There are even reports that Apple is trying to enter the electric vehicle space.

there’s more

Apple’s ambitious plans could go even further, as it had about $ 80 billion in net cash in the previous quarter. The company is gradually trying to reach “a net cash neutral position over time” to reduce its cash position. Last quarter, it returned approximately $ 22 billion to shareholders through dividends and buybacks – its dividend yield is currently 0.60%.

Apple also remains the most valuable brand in the world and its stock price is 460% higher than Microsoft MSFT and Amazon AMZN in the last five years. More recently, its shares have climbed 75% in the last year and 22% in the last three months.

Apple trades at 12 months of sales at 7.1X. It marks only a modest premium for its industry and represents a solid discount to Microsoft’s 10.2X, as it has for years. And AAPL’s 4-for-1 stock split at the end of the summer made it more attainable and attractive to many investors.

Ground level

The epidemic forced Apple to roll back the release of its next generation iPhone by October and in late September. This will help boost its Q1 fiscal 2021 sales slightly, as it goes against an easy comparison period.

Zacks estimates that Apple’s adjusted first-quarter earnings are up 11% to $ 1.39 per share, around 12% on strong revenue that will pull more than $ 100 billion to $ 102.6 billion in the first quarter.

Then Apple’s fiscal 2021 earnings are projected to jump 17%, with its adjusted earnings expected to be 23% higher. And AAPL’s positive long-term earnings revision will help it take a rack rank # 2 (buy) right now.

There are always risks to playing stock for term gains around earnings, especially when it has reached new highs in earnings. Said that, long-term investors should not worry about trying Apple’s time if they are optimistic about its successful success.

More stock news: it’s bigger than the iPhone!

It can become the mother of all technological revolutions. Apple sold just 1 billion iPhones in 10 years, but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $ 1.7 trillion market.

Zacks has recently released a special report which highlights this fast emerging phenomenon and has 6 tickers to take advantage of. If you don’t buy now, you can kick yourself in 2021.

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