Is March 6, 2015 a Good Time to Buy Apple Stock?
Apple Inc., the technology giant known for its innovative products and strong financial performance, has long been a favored stock choice for many investors. As of March 6, 2015, the stock was particularly appealing due to several compelling reasons. This article explores whether this date represented a good time to invest in Apple and provides insights for potential investors.
Why Apple Stock is a Solid Choice
Apple Inc. stands out in the stock market for several reasons that make it an attractive investment:
1. Intrinsically Affordable: At that time, Apple's forward Price-to-Earnings (P/E) ratio was 11, which is notably lower than the SP 500's 18. This suggests a more favorable valuation, making the stock relatively cheap compared to the broader market.
2. Generous Dividend: Apple diverts a significant portion of its earnings into dividends, offering a yield of 2.4%. This is notably higher than what many other tech companies provide, making it an appealing income-generating asset.
3. Abundant Cash Reserves: Apple was sitting on about $200 billion in cash reserves, which translates to substantial financial strength. This liquidity gives the company flexibility to pursue various strategic initiatives, including reinvesting in research and development (RD) or repurchasing shares.
4. Stock Buybacks: Apple announced a massive buyback program, providing a positive catalyst for investors. By purchasing back its own shares, Apple can potentially boost the stock's value and allow remaining investors to own a larger slice of the pie.
Decisions and Prospects
Despite the positive indicators, deciding to buy Apple stock on March 6, 2015, would have required assessing the market conditions and Apple's product pipeline, particularly its upcoming Apple Watch. According to many analysts and investors, the success of the Apple Watch would have been a crucial factor:
1. Uncertain Market Reception: The launch of the Apple Watch presented a mixed bag. If the market embraced the product, it would likely boost the stock price. Conversely, a lukewarm reception could have dampened investor enthusiasm.
2. Long-Term Perspective: For a long-term investor, the decision might have warranted a smaller, less risky investment. Holding a portion of the portfolio in Apple would provide exposure to the large and growing consumer electronics market without requiring an overly substantial commitment.
Expert Analysis
Analysts and financial experts offer valuable insights into the state of the Apple stock on March 6, 2015:
1. Simply Wall Street: According to Simply Wall Street, Apple might have been slightly overvalued at a stock price of around $125, compared to aDiscounted Fair Value of around $95. However, the assessment also highlighted the stock's favorable price based on past earnings and its strong projected earnings growth of 55%.
2. Todd Billings: Todd, known for his trading insights, agreed that Apple was a good investment. He noted that the stock was trading at a Price-to-Earning ratio of around 17, below the SP 500's average of 19.6. The presence of significant current assets, specifically cash, is crucial, underscoring the importance of financial strength in assessments of growth potential.
Conclusion
While purchasing Apple stock on March 6, 2015, could have been a smart move based on several compelling factors, it's important to remember that investing always carries risks. The tech industry is highly dynamic, and individual product performance can significantly impact stock prices. Therefore, a long-term, patient, and diversified investment strategy is crucial.