Insights

Should You Buy Apple Stock Right Now?

Apple (NASDAQ: AAPL) is one of the best-known companies in the world, and has made plenty of shareholders wealthier over the past several decades. Its demonstrated ability to repeatedly create innovative tech products and services keeps it top of mind with a broad swath of consumers. 
But for long-term investors, is Apple’s stock still a buy right now?
Image source: Getty Images.

Services and iPhone driving success for Apple 
Apple has delivered robust growth despite its massive size. In the past decade, its revenue increased at a compound annual rate of 12.9%. That has translated into sales rising from $156 billion in 2012 to $366 billion in 2021. The iPhone has fueled Apple’s success over that time. Now in its 13th generation, the popular smartphone is in the pockets of roughly 1 billion people worldwide.
Perhaps equally as important, Apple is progressively expanding its services business. That segment includes its Apple Music and  Apple TV+ streaming services, which have grown to over 825 million paid subscriptions worldwide, and rose by 165 million in the last year. In its most recently completed quarter, which ended March 26, revenues from Apple’s services segment totaled $19.8 billion. The company’s overall revenue was $97 billion during that period.
The services segment is vital because it generates higher profit margins than the product segment. In its most recent quarter, the gross profit margin for the product segment was 36.4%, while for the services segment, it was 72.6%. Growing the services business has helped Apple boost its operating income from $55 billion in 2012 to $109 billion in 2021.

AAPL Operating Income (Annual) data by YCharts
That said, Apple’s business is not without challenges. Supply chain disruptions are impairing its ability to capitalize on consumer demand. Management forecasts it will miss out on $4 billion to $8 billion in sales in its current fiscal quarter because it will not be able to meet its full customer demand. There is no telling how long these headwinds will persist as the long-term effects of the pandemic and other macro factors continue to reverberate across the global economy.
Is Apple’s stock too expensive?

AAPL Price to Free Cash Flow data by YCharts
Apple is trading at a price-to-free-cash-flow ratio of 25.9 and a price-to-earnings ratio of 26.1. By those metrics, the stock is not cheap — but it’s not expensive either. Considering that over the last decade, Apple has transitioned more of its business to recurring revenue sales that produce higher margins, one can argue it justifies a higher price multiple. 
Moreover, when measured against one of its main competitors, Microsoft, Apple is trading at a discount based on those same metrics. 
The verdict 
Whether or not to buy Apple stock at current levels is not an easy decision. The shares are not cheap, and the business faces headwinds from supply chain shortages and rising input costs. Since the pandemic’s onset, consumer demand has been incredible, but it could slow as higher inflation bites into people’s discretionary income. 
However, Apple’s repeatedly created innovative products that generated billions of dollars in annual sales. That capability could lead to robust investor returns over the next five to 10 years. So if you’re a long-term investor, Apple stock could be right for you. 
Parkev Tatevosian has positions in Apple. The Motley Fool has positions in and recommends Apple and Microsoft. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy. –

Apple (NASDAQ: AAPL) is one of the best-known companies in the world, and has made plenty of shareholders wealthier over the past several decades. Its demonstrated ability to repeatedly create innovative tech products and services keeps it top of mind with a broad swath of consumers. 

But for long-term investors, is Apple’s stock still a buy right now?

Image source: Getty Images.

Services and iPhone driving success for Apple 

Apple has delivered robust growth despite its massive size. In the past decade, its revenue increased at a compound annual rate of 12.9%. That has translated into sales rising from $156 billion in 2012 to $366 billion in 2021. The iPhone has fueled Apple’s success over that time. Now in its 13th generation, the popular smartphone is in the pockets of roughly 1 billion people worldwide.

Perhaps equally as important, Apple is progressively expanding its services business. That segment includes its Apple Music and  Apple TV+ streaming services, which have grown to over 825 million paid subscriptions worldwide, and rose by 165 million in the last year. In its most recently completed quarter, which ended March 26, revenues from Apple’s services segment totaled $19.8 billion. The company’s overall revenue was $97 billion during that period.

The services segment is vital because it generates higher profit margins than the product segment. In its most recent quarter, the gross profit margin for the product segment was 36.4%, while for the services segment, it was 72.6%. Growing the services business has helped Apple boost its operating income from $55 billion in 2012 to $109 billion in 2021.

AAPL Operating Income (Annual) data by YCharts

That said, Apple’s business is not without challenges. Supply chain disruptions are impairing its ability to capitalize on consumer demand. Management forecasts it will miss out on $4 billion to $8 billion in sales in its current fiscal quarter because it will not be able to meet its full customer demand. There is no telling how long these headwinds will persist as the long-term effects of the pandemic and other macro factors continue to reverberate across the global economy.

Is Apple’s stock too expensive?

AAPL Price to Free Cash Flow data by YCharts

Apple is trading at a price-to-free-cash-flow ratio of 25.9 and a price-to-earnings ratio of 26.1. By those metrics, the stock is not cheap — but it’s not expensive either. Considering that over the last decade, Apple has transitioned more of its business to recurring revenue sales that produce higher margins, one can argue it justifies a higher price multiple. 

Moreover, when measured against one of its main competitors, Microsoft, Apple is trading at a discount based on those same metrics. 

The verdict 

Whether or not to buy Apple stock at current levels is not an easy decision. The shares are not cheap, and the business faces headwinds from supply chain shortages and rising input costs. Since the pandemic’s onset, consumer demand has been incredible, but it could slow as higher inflation bites into people’s discretionary income. 

However, Apple’s repeatedly created innovative products that generated billions of dollars in annual sales. That capability could lead to robust investor returns over the next five to 10 years. So if you’re a long-term investor, Apple stock could be right for you. 

Parkev Tatevosian has positions in Apple. The Motley Fool has positions in and recommends Apple and Microsoft. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

  • This field is for validation purposes and should be left unchanged.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US & HK* Trades. Click Here!