Buy Apple Shares at Record Highs Ahead of Q1 Profits?

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Apple AAPL stock helped the Nasdaq reach new highs this week, and the company hit its own record highs on Friday ahead of the release of its fiscal 2021 first quarter results on Wednesday, January 27. Apple has now jumped almost 30% since the end of October. and analysts are well on his latest iPhone.

Continued domination

Apple does not need to be introduced as it continues its steady expansion beyond iPhones in services and more. But despite its successful diversification, its flagship smartphones still play a vital role in the business and on Wall Street, and accounted for 50% of total revenue in fiscal 2020.

Fortunately, Wall Street is on top of its first 5G-enabled iPhone launched in October. The iPhone is available in four models at different prices. Apple has priced its high-end models at about the same price as last year’s iPhone 11, despite the new features and 5G capabilities. And Morgan Stanley analyst Katy Huberty called the iPhone 12 “Apple’s most successful product launch in the past five years.”

Apple has also benefited from stronger sales of Macs and iPads in the remote work and school environment. And its wearable device unit that includes its popular smartwatch and wireless headphones has also grown, up 25% last year to overtake the 16% expansion of its key service unit.

Apple now has revenue streams from its massive App Store, subscription services such as competitor Spotify SPOT Apple Music, as well as its streaming TV service that hopes to one day compete with Netflix NFLX and others. The company also has an offering of news, video games, etc.

Apple’s paid subscriptions grew by more than 35 million sequentially to reach over 585 million paid subscriptions across its various services in the last quarter. And executives are expected to reach a total of 600 million by the end of calendar year 2020.

Before we move on, it’s also worth remembering that Apple is putting more effort into bringing more of its chips in internally. This move is expected to help reduce costs and improve battery life and performance as it continues to close the loop, while also diversifying. There are even reports that Apple is trying to enter the electric vehicle space.

There is more

Apple’s ambitious plans can go even further given that they ended last quarter with around $ 80 billion in net cash. The company has slowly reduced its cash position to try to achieve “a neutral net cash position over time”. Last quarter it returned roughly $ 22 billion to shareholders in the form of dividends and buybacks – its dividend yield is currently 0.60%.

Apple also remains the world’s most valuable brand, and its stock price has overtaken Microsoft MSFT and Amazon AMZN over the past five years, rising 460%. More recently, its shares have climbed 75% in the past year and 22% in the past three months.

Apple is trading at 7.1 times its 12-month sales. This is only a slight premium to its industry and is a solid discount from Microsoft’s 10.2X, as it has been doing for years. And AAPL’s 4-for-1 stock split at the end of the summer made it more accessible and attractive to many investors.

Conclusion

The pandemic has forced Apple to postpone the release of its next-generation iPhone to October and not to the end of September. This will help slightly increase its sales in the first quarter of fiscal 2021, as it faces an easier time frame to compare.

Zacks estimates that Apple’s adjusted first-quarter profit is expected to climb more than 11% to $ 1.39 per share, on nearly 12% revenue that would see it earn more than $ 100 billion in a single quarter for the first time, at $ 102.6 billion.

Apple’s revenue for fiscal 2021 is then expected to increase 17%, and its adjusted profit is expected to rise 23%. And AAPL’s positive long-term earnings reviews are helping it land a Zacks # 2 (Buy) rank right now.

There are always risks involved in playing a stock for short-term gains around earnings, especially when it has reached new highs before turning a profit. That said, long-term investors shouldn’t worry about trying to time Apple if they’re optimistic about its advertised success.

More news: it’s bigger than the iPhone!

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

Zacks has just published a special report that highlights this rapidly emerging phenomenon and 6 tickers to take advantage of it. If you don’t buy now, you could get started in 2021.

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