Dow 30 Review: Apple Inc.

In this week’s newsletter, we are taking another look at shares of Apple Inc. (AAPL). The California tech giant is one of the world’s largest marketers of consumer electronics, including the iPad tablet, the iPhone smartphone, and the Apple Watch smartwatch. It also is one of the largest corporations trading on the U.S. exchanges, with a market capitalization of $2.3 trillion. Apple only joined the Dow Jones Industrial Average in March of 2015, but is now the largest component on that list in terms of market capitalization.

The consumer tech giant closed fiscal 2022 (ended September 30th) on a positive note. Apple registered new records for iPhone, Mac, wearables, Home and Accessories sales, as well as Services revenues for the full year. Growth in emerging markets, such as India, Southeast Asia, and Latin America, despite negative currency effects, also spurred its recent performance. In all, earnings per share jumped nearly 9%, on an 8% revenue advance last year.

Apple will likely face challenging business conditions in the near term. Supply-chain disruptions and pandemic-related business delays could hinder production. Sluggish macroeconomic growth and inflation may well lead to lower consumer discretionary spending. Consequently, we have reduced our forecast for fiscal 2023, but we expect the top and bottom lines will still advance at a low-single-digit clip.

The company’s long-term growth prospects look bright. We expect that demand for its products will continue to push sales upward. Moreover, higher-margin service-related revenues will likely contribute an increasing portion of the top line.

As for the stock, there is a lot to like here. According to our Timeliness™ Ranking System, Apple shares are ranked 1 (Highest) for relative performance in the year ahead. In addition, with its strong financial profile, the company garners our top rank for Safety™ (1), and retains the highest grade for Financial Strength (A++). We think that AAPL still offers decent risk-adjusted total return potential over the next three to five years.