“From January 1, 1990 to December 31, 2021, Apple stock has returned roughly 70,600%, yes you read that right. In the same period, the S&P 500 returned roughly 2540%. Building solid consumer products and offering terrific in-store experiences around the world seem to matter.”
COMPANY PROFILE
Take a look around your house. If you’re like me, there’s a handful of Apple products littered through your house and they are in high-demand. We have 3 iPads, 2 iPhones, 1 AppleTV, and 2 MacBooks. There are very few, if any brands that dominate multiple consumer product categories and hold >90% customer loyalty. Is there any wonder Apple is the most valuable company in America?
Consider some powerful facts:
> 1 billion iPhones have been sold since they were created.
iPhone loyalty is roughly 92% meaning >90% of current iPhone users will buy a new iPhone when they make the new purchase.
Apple has >1.4 billion active devices in use around the world. How’s that for a large installed base from which to get recurring service revenue for?
Apple now has $130 billion of net cash on the balance sheet making it the world’s most impressive cash flow generator.
In the latest quarterly earnings, Apple reported revenue of $84.3billion which means they generated roughly $936 million in sales every day, for 90 days.
Apple has a suite of high demand products for businesses and consumers: iPhone, iPad, iMac, MacBook, Apple Watch, Apple TV. HomePod, iPod Touch, Accessories for all, Apple Music, Earbuds, etc.
Talk about a sticky, high demand, important product. Currently, smartphone usage consumers about 1/3 of our waking hours. And my daughter wonders why we won’t get her a phone yet! Great chart from Professor Scott Galloway.
Style Factor Details
From a factor scoring perspective versus the other 199 brands in the brands index, here’s where Apple scores well as of 12/31/2021:
91% strong price momentum across multiple periods
70% high dividend growth
86% high shareholder yield - shareholder benefits form of cash dividends, net stock repurchases, and debt reduction.
97% high and growing ROIC
91% accelerating sales growth 1YR vs 3YR average
100% high absolute free cash flow
99% high absolute sales
80% low default risk
98% strong sales surprise last quarter
81% strong 1 year sales growth
84% strong 1 year EPS growth
1/30/22 Update
Earnings: Shocker, a beat again. The greatest consumer staple ever created. 98% customer loyalty, massive repeat purchases of products and services. Global brand love and sales opportunities. Buying back the float every single year. Strong dividend grower, FCF generator and key consumer need via iphones that get replaced every 3 years or so for most. Apple today announced financial results for its fiscal 2022 first quarter ended December 25, 2021. The Company posted an all-time revenue record of $123.9 billion, up 11 percent year over year, and quarterly earnings per diluted share of $2.10. I don’t think we need to say anything else, it’s simply a buy on every meaningful dip around a core position I will not sell unless I see some major disruptive force coming.
Apple is truly the most impressive brand I have ever witnessed. They have a wildly loyal customer base, enormous brand recognition & relevancy, a significant amount of high demand products that appeal to kids through the elderly and in most countries around the world. That’s the definition of a Mega-Brand and no one should be surprised the company has a $3 trillion valuation. In my opinion this stock is the most important consumer staple on the planet and it’s going higher as they introduce new products that resonate around the core iPhones. It’s a dividend growth machine so investors get a pay raise each year where the dividend is concerned. Active installed base is at an all time high. Customer satisfaction for iPhone is 99% in the last 2 phones. My only issue is the $3 trillion, maybe tree’s really do grow to the sky’s? Maybe the Epic Games decision at some point puts their high revenue at risk from the fee’s other companies pay them in the app store but that has been pushed back for a year or two. This years ramp was largely an ETF effect thing imo as a historic amount of flows went to ETFs and Apple gets the top share of those dollars. I do not think that’s repeatable in 2022 but it’s a core position and I love to trade around it when it gets clocked.
Apple has been an extraordinary company that’s delivered long-term investors some staggeringly good returns. Services that surround the iPhone are the fastest growing part of the business now and those have meaningful room for growth with such an enormous installed base. Again, Apple is a strong dividend growth stock with stable and predictable earnings which isn’t so bad for the kind of market we currently have. They have so much cash to throw at so many potential new revenue opportunities that it’s hard to bet against them. All I hear is Apple has no room to grow, and they do not innovate yet the massive global installed base continues to buy more and more of their products. I love my earbuds and look forward to getting the new noise cancellation ear buds.