The market is not always predictable. In this sense, I am not talking about the volatility of the market. What I mean here is that most investors are often after cheaper and low-quality stocks instead of focusing their attention on stocks that are highly valued and can guarantee those returns in the future. Why this is so, I do not know, but one thing is certain; it is really happening in the market. Some of these high-value stocks are seen as boring investments to most of these investors, so their first instinct is to push them aside. But as an investor, you should only have one thing on your mind; is this stock going to bring me money? If the answer is yes, then you are free to invest, but if No, you know what to do. It is always better to invest in companies that can stand the test of time and any changes that would occur in the market and will, in the end, bring in a lot of returns. Today, we will be talking about one of those stocks, so please stay tuned. And you may also interested to check out my other blogs such as “What’s Up With Growth Stocks“?
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Moving straight to the business of the day, we will be discussing a particular tech stock that is being undervalued. When we talk about tech stocks, what comes to mind? Apple, Facebook, Tesla, Amazon, Netflix, NVidia, and others. But of all these companies, one of them is being a little undervalued, and I want to open your eyes to it. Guess which company it is?
Apple Inc. Yes, almost everybody knows Apple as a tech giant, but how many know how valuable their stocks will be in the near future? Let’s start with the statistical numbers. The general market for the fourth quarter of 2020 has been trading at a value of less than 40 in terms of PE ratio. But the current PE ratio, at least, as of June 8, 2021, was 28.46. The question on your mind may be, what are those things we need to look into before concluding that Apple is a great stock? Looking at the Forward PE basis, Apple is expected to have a value of 24.60 by September 2021 and maybe drop to a value of 23.96 by September 2022. This decrease in value is so small, and this is because analysts are predicting a really low sales growth percentage in the next year. As a wise investor, if you notice that market analysts are underestimating the potential of a company, it should mean a subsequent drop in prices. But if you have done your research well enough, you would realize that this may be a great buying opportunity, as the company may prove them wrong. That is the case with Apple. I believe it would be difficult for Apple sales growth to go from almost 30% to about 4% in just over a year, so I believe this may be a good time to buy the stock.
Look at it this way. As long as Apple maintains the prestigious brand they are known for, as long as they are as innovative as we have known them to be, it will keep surviving the test of time. Analysts have projected that Apple is almost thirty percent undervalued, and in my opinion, this is a great opportunity to invest in one of the largest tech companies in the world. There is a general misconception whenever Apple hits its All-time top high. When it hit half a trillion, people were like, “this is as high as it can go.” Then it hit one trillion, then a trillion and half, and now its market cap is over two trillion. By now, people should have understood that the company will continue to grow and have a higher market cap as long as they do what they do. Apple, over the years, at least from 2012 till now, has averaged a net income of around fifty billion dollars. But if you look at the value for this year, it has been projected to have a net income of about eighty-six billion, which is over seventy percent increase in value from the past years. On a historical basis, Apple stocks are cheap.
The provision of top-quality services has always been a big part of Apple’s business, and this is why they are still at the top of the tech market. And if you are a shareholder of Apple, you need to be excited because the company’s board of directors has declared a dividend of 0.22 dollars per share from the company’s stock, which represents an increase of almost seven percent. This was implemented in May 2021. They have also authorized a significant increase of ninety billion to the repurchase program.
These are some of the things we know. What about those plans that they are probably working on? They are going into different sectors like health, for instance. They are also working on some other things. Now, they have a new venture named Group FaceTime, which would be a direct competitor for Zoom, amongst other things. However, from the perspective of a good investor, Apple stocks are being undervalued at this point. They are trying to focus on other companies that can make 10x or 5x in a short time.
In conclusion, you cannot overlook a company that has so much brand presence, market cap, and innovation. No matter what happens, we have to understand that Apple is at the top and will stay at the top for some time. If you liked this blog, please like and share it with others. Also, let me know what your views and thoughts are in the comment box below.
Recommended for further reading:
- Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week
- The Five Rules Successful Stock Investing: Morningstar’s Guide to Building Wealth and Winning in the Market
- Investing QuickStart Guide: The Simplified Beginner’s Guide to Successfully Navigating the Stock Market, Growing Your Wealth & Creating a Secure Financial Future
- The Barefoot Investor: The Only Money Guide You’ll Ever Need