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Buy Soaring Apple (AAPL) Stock for 2020 on Services Growth & More?
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Apple (AAPL - Free Report) shares have skyrocketed nearly 80% in 2019 to crush all of its FAANG peers and the S&P 500’s 27% climb. AAPL stock also hit another new high Tuesday and its recent run comes as Apple returns to growth after it suffered a pullback based on slowing iPhone sales.
Apple’s Pitch
Apple is a trillion-dollar company today, thanks in large part, to the success of the iPhone and its ability to sell high-priced tech devices in crowded markets. The firm is the most valuable brand in the world, according to Forbes, ahead of everyone from McDonald’s (MCD - Free Report) to Disney (DIS - Free Report) . CEO Tim Cook and Apple have continued to cultivate this brand and consumer loyalty that sees people pay over $1,000 for a new iPhone, despite fewer game-changing updates.
With this in mind, Cook and Apple have for years bolstered the company’s non-iPhone business. This includes its push into wearables, from smartwatches to the widely popular AirPods. Wall Street has also become enamored with Apple’s services segment that features its widely successfully app store and Spotify (SPOT - Free Report) challenger Apple Music.
In the last year, the company has also rolled out an Apple credit card, with the help of Mastercard (MA - Free Report) and Goldman Sachs Group (GS - Free Report) , a magazine-heavy news subscription, a new Apple Arcade video game service, and most recently its streaming TV offering. Apple TV+ hopes to compete alongside Netflix (NFLX - Free Report) and Amazon (AMZN - Free Report) in the growing space.
Apple’s goal is to generate more revenue from its over 1 billion active devices out there. The company’s service unit climbed 18% last quarter (Q4 2019) and 17% for the year to account for 18% of total 2019 revenue—easily the second-largest division behind iPhone’s 55% and more than Mac and iPad combine. “We now have 450 million paid subscriptions across the services on our platform compared to over 330 million just a year ago, and we are well on our way to our goal of surpassing the 500 million mark during 2020,” CFO Luca Maestri said on the company’s Q4 conference call.
Other Fundamentals
Investors can see that Apple stock has rebounded big-time since early January. AAPL stock hit a brand new intraday high of $281.77 per share Tuesday and is up 26% in the last three months, which looks all the more impressive considering that Amazon is down 2% and Microsoft (MSFT - Free Report) is up only 12%.
Along with this climb has come a stretched valuation picture. Apple stock is currently trading at 20.5X forward 12-month Zacks earnings estimates. This marks a three-year high and comes in far above its 15.2X median during this stretch.
Apple’s annualized dividend yield rests at 1.10% right now, which rests far below the 10-year U.S. Treasury note’s 1.88% and its $1 trillion market cap peer Microsoft.
Outlook
Apple’s quarterly sales fell 4.5% and 5.1% during the first two quarters of last year, mostly due to hard-to-compare periods of outsized growth driven by higher-priced iPhones. AAPL’s sales then jumped 1% and 1.8% to close out the year. Overall, Apple’s 2019 sales slipped 2% below its 16% revenue expansion in 2018.
Our Zacks estimates call for Apple’s Q1 2020 sales to jump 4.1% to $87.74 billion, with second quarter sales projected to pop nearly 8%. Peeking further ahead, Apple’s full-year fiscal 2020 revenues are projected to surge 5.7% to $275.09 billion, which would easily top 2018’s $265.59 billion.
More specifically, the company’s services business is projected to jump roughly 16% from $46.29 billion last year to $53.61 billion.
And Apple’s fiscal 2021 sales are expected to surge another 8.1% above our current-year estimate to over $297 billion.
At the bottom end of the income statement, AAPL’s adjusted holiday-quarter earnings are projected to climb 8%, with full-year 2020 expected to jump 10%. Then, its fiscal 2021 EPS figure is expected to jump another 16%.
Bottom Line
Apple stock is currently a Zacks Rank #3 (Hold) based on its mixed earnings estimate revisions activity. However, Apple’s growth appears to be ready to roar back and the recent phase one U.S.-China trade war deal helped the market in general.
Apple executives have been pleased with the early success of its new iPhone 11 models. Yet, analysts and tech lovers are already looking ahead to the expected 2020 launch of Apple’s first 5G iPhone, which will likely be a talking point for much of the next year.
Therefore, Apple stock appears to be one to consider buying for 2020, even though some investors might want to wait for it to cool off a bit—but who knows when that will be.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Buy Soaring Apple (AAPL) Stock for 2020 on Services Growth & More?
Apple (AAPL - Free Report) shares have skyrocketed nearly 80% in 2019 to crush all of its FAANG peers and the S&P 500’s 27% climb. AAPL stock also hit another new high Tuesday and its recent run comes as Apple returns to growth after it suffered a pullback based on slowing iPhone sales.
Apple’s Pitch
Apple is a trillion-dollar company today, thanks in large part, to the success of the iPhone and its ability to sell high-priced tech devices in crowded markets. The firm is the most valuable brand in the world, according to Forbes, ahead of everyone from McDonald’s (MCD - Free Report) to Disney (DIS - Free Report) . CEO Tim Cook and Apple have continued to cultivate this brand and consumer loyalty that sees people pay over $1,000 for a new iPhone, despite fewer game-changing updates.
With this in mind, Cook and Apple have for years bolstered the company’s non-iPhone business. This includes its push into wearables, from smartwatches to the widely popular AirPods. Wall Street has also become enamored with Apple’s services segment that features its widely successfully app store and Spotify (SPOT - Free Report) challenger Apple Music.
In the last year, the company has also rolled out an Apple credit card, with the help of Mastercard (MA - Free Report) and Goldman Sachs Group (GS - Free Report) , a magazine-heavy news subscription, a new Apple Arcade video game service, and most recently its streaming TV offering. Apple TV+ hopes to compete alongside Netflix (NFLX - Free Report) and Amazon (AMZN - Free Report) in the growing space.
Apple’s goal is to generate more revenue from its over 1 billion active devices out there. The company’s service unit climbed 18% last quarter (Q4 2019) and 17% for the year to account for 18% of total 2019 revenue—easily the second-largest division behind iPhone’s 55% and more than Mac and iPad combine. “We now have 450 million paid subscriptions across the services on our platform compared to over 330 million just a year ago, and we are well on our way to our goal of surpassing the 500 million mark during 2020,” CFO Luca Maestri said on the company’s Q4 conference call.
Other Fundamentals
Investors can see that Apple stock has rebounded big-time since early January. AAPL stock hit a brand new intraday high of $281.77 per share Tuesday and is up 26% in the last three months, which looks all the more impressive considering that Amazon is down 2% and Microsoft (MSFT - Free Report) is up only 12%.
Along with this climb has come a stretched valuation picture. Apple stock is currently trading at 20.5X forward 12-month Zacks earnings estimates. This marks a three-year high and comes in far above its 15.2X median during this stretch.
Apple’s annualized dividend yield rests at 1.10% right now, which rests far below the 10-year U.S. Treasury note’s 1.88% and its $1 trillion market cap peer Microsoft.
Outlook
Apple’s quarterly sales fell 4.5% and 5.1% during the first two quarters of last year, mostly due to hard-to-compare periods of outsized growth driven by higher-priced iPhones. AAPL’s sales then jumped 1% and 1.8% to close out the year. Overall, Apple’s 2019 sales slipped 2% below its 16% revenue expansion in 2018.
Our Zacks estimates call for Apple’s Q1 2020 sales to jump 4.1% to $87.74 billion, with second quarter sales projected to pop nearly 8%. Peeking further ahead, Apple’s full-year fiscal 2020 revenues are projected to surge 5.7% to $275.09 billion, which would easily top 2018’s $265.59 billion.
More specifically, the company’s services business is projected to jump roughly 16% from $46.29 billion last year to $53.61 billion.
And Apple’s fiscal 2021 sales are expected to surge another 8.1% above our current-year estimate to over $297 billion.
At the bottom end of the income statement, AAPL’s adjusted holiday-quarter earnings are projected to climb 8%, with full-year 2020 expected to jump 10%. Then, its fiscal 2021 EPS figure is expected to jump another 16%.
Bottom Line
Apple stock is currently a Zacks Rank #3 (Hold) based on its mixed earnings estimate revisions activity. However, Apple’s growth appears to be ready to roar back and the recent phase one U.S.-China trade war deal helped the market in general.
Apple executives have been pleased with the early success of its new iPhone 11 models. Yet, analysts and tech lovers are already looking ahead to the expected 2020 launch of Apple’s first 5G iPhone, which will likely be a talking point for much of the next year.
Therefore, Apple stock appears to be one to consider buying for 2020, even though some investors might want to wait for it to cool off a bit—but who knows when that will be.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>