How would you analyze Apple as a prospective investment?
I am a shareholder of Apple (and pretty happy about it).
To be simple, Apple is valued as a hardware company, which means that the multiples are fairly low (around 16x the estimated PE 2017). The company is working hard to increase the service part of their business (giving more freedom and tools to developers, for example, to create value over the lifetime of the app instead of a one time buy) which is in line with their strategy to change the investment thesis: Apple is not a hardware company but a tech company (and should get the multiples that goes with it).
On the minus side, services represent a really microscopic share of their revenues (<5%) and they don't have a great track record when it comes to converting "one-off buying process" to monthly subscription. Music is a great illustration: who has an Apple music subscription? They need to nail the next use case, which could definitely be health related (huge potential for disruption). Unfortunately, they are late in AI → compare Siri vs. Alexa, automated cars, AR/VR. Though Apple doesn't need to be the first to market (the iPod and iPhone were not the first product in their category). It could also be a new TV experience. They are reportedly working on content. I have to say that i am a little "afraid" of that as costs are out of control (look at how much Amazon, Netflix, Tencent, Alibaba etc are spending on content → astronomical). Apple TV has never been a "great" product, but a revamped version with an innovative value proposition could disrupt the massive industry. I don't believe in the M&A rumors about Disney.
The company have billions of users (and growing). Imagine the impact of an increase of "the ARPU". The brand value is enormous: most of the growth of last quarter in # of iPhone sold came from new customers, which means that even though the iPhone 7 is a light upgrade of the iPhone 6+, more and more customers are attracted and switch to the Apple ecosystem (part could also be explained by the Samsung fiasco). The new approach to service will raise the cost of switching to another platform for a user. Knowing that they are working on the renewal cycle (financing of phones and when people are upgrading their phone), it is encouraging. They are also growing fast in China and India (major markets). Some hurdles and competitive threats are to be mentioned (government intervention, tough competition from Huawei, LeEco, Xiaomi → very dynamic market with competitors who are not afraid to lose money etc).
The major question is to know if Apple will still have the edge on the next major platform? Smartphones are just a step in the computing revolution. But what product is coming next is a great question. I am confident in Apple to nail that. They have a remarkable experience in design and how to move product (which are both 2 really, really complex tasks). They have the resources, talent and capabilities to expand on the software side.
Regarding the market: indexes are at their all time high, the macroeconomic environment is crazy (Brexit, populist administration in the US, etc.), lack of history regarding the market parameters (inflation and interest rates close to 0 over the past few years etc.) → we might see a correction. Though Apple is one of the best performer of the year and the graphical analysis shows some more potential. A majority of the cash is held outside the US and this administration might allow a repatriation at lower cost (which would be positive).
I would firstly consider the name.
It is named after a commonly used word, but the word is a fruit. May be bad for marketing purposes in a technical sense.
I would consider the populous.
I would investigate the team of people I am to invest in. The individual determines the success of a product more than the product itself. A good salesman can sell you any product while a shit salesman won't have practice, and practice makes perfect.
If the team is dedicated, communicates well, and has a goal or drive, I would invest.
I would consider the era.
If the general public is not ready or already to technically advanced for a product, I will or will not invest. I know it is vague and does not apply much, but I believe it sets a framework for me to judge a business upon first glance. If the idea seems off to me for any particular reason, it is likely going to cause the same reaction in 100 if not 1 million more individuals once the product goes viral. Always trust your gut.
Apple has turned out to be a sleeping giant, Steve Jobs started a revolution by opening doors to innovative ideas that the world was ready for. Constant video and radio surveillance.. :)
Disclaimer: I'm an employee (just shy of 10 years, now) and a stock holder.
I have enjoyed >300% return on my very small cost-averaged investment. It enabled me to buy a house after the financial ruin of my divorce. This is important to my two very large dogs. ;-)
I encourage you to do some research, however and don't just take my opinion that it's a good investment. Look at their 10-K filing (I reviewed this before I worked for them) and look at Braeburn Capital (a wholly owned subsidiary of Apple, Inc.) and factor in whether dividends are a key component in your investment strategy (AAPL pays them now, hasn't always).
Also, consider investing in the market itself, in this way, you own a little bit of everything, look up VTI. (My holdings in stock are only in AAPL, but this is a good strategy as well).
Good luck, I hope your decision is one you are happier with as time goes on.
Apple is Goliath like Microsoft, Google or other major tech company.
Missing their earnings forecast is not related to unforseable expenses but rather lackluster sales of products.
The best way to analyze Apple as a prospective investment is to follow what new products or existing product enhancements they have in the pipelines. They're consumer driven.