3 Reasons To Buy Apple Inc. Stock Now

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Apple (NSDQ:AAPL) could be setting up for a strong finish to calendar the year 2016. Apple stock has reversed all the losses which had been incurred in the trading sessions following the Trump victory. With the stock gaining over 6% from its recent lows, is this a 'dead cat' bounce or the beginning of a long-term rally? Should you sell on the bounce or buy on the dip? These are questions which could crop up in the minds of investors.

Apple Stock Is Trading At Throwaway Valuations

Apple stock is currently trading at a trailing twelve month (TTM) PE ratio of 13.4 (based on Nov 23 close price) and PS ratio of 2.77, both of which are at a discount to the long-term (5 years) average multiples the stock has enjoyed. The stock is also trading at a discount to its industry, as pointed out by fellow contributor Stavros in his recent Apple post. What makes the Apple bullish thesis stronger are the high return ratios (ROE of 36%) which the company continues to deliver, which come along with the industry-leading profit margins. 

Talking about profitability, a recent report by strategy analytics puts things into perspective. The analytics powerhouse stated that Apple cornered 91% of global smartphone profits in Q3 2016. Quoting from the report:

We estimate the global smartphone industry realized total operating profits of US$9.4 billion during Q3 2016. Apple dominated and captured a record 91 percent share of all smartphone profits worldwide. Apple’s ability to maximize pricing and minimize production cost is hugely impressive and the iPhone continues to generate monster profits. Huawei, Vivo and OPPO are the next three most profitable smartphone vendors globally this quarter, but they are still a long way behind Apple.

With Samsung out of the race in the premium segment until their next major product launch (in April 2017), Apple should be able to leverage the vacuum created by Samsung's loss and will take the home majority of the profits in this space for at least the next 2 quarters. Apple is leaving no stone unturned to make the most of this opportunity, with the company announcing a one-day sale on Black Friday.

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Disclosure: Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. The author may not be a ...

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Bruce Powers 4 years ago Member's comment

What about #Trump's plan to clamp down on companies trying to avoid paying US taxes. #Apple is one of the worst offenders. Couldn't this have a negative impact on $AAPL?

Roger Keats 4 years ago Member's comment

Enjoyed reading, thanks for the $AAPL education

Fred Fuld 4 years ago Contributor's comment

I agree with you. Don't forget the decent 2% yield. Dividend was raised in May, and I expect another $AAPL dividend increase next year.

Chee Hin Teh 4 years ago Member's comment

Thanks and Happy Thanks Giving Day