It can be very daunting to invest in a stock especially during its drag period. However, despite the problems of apple stock and uncertainty about the company's rate of innovation, there are still good reasons to have Apple (NASDAQ:AAPL) in your portfolio.
Apple stock price had hit a high of $133 in Feb 2015 before dropping back to $106.03 (Dec 18 close).
Source: Apple stock price data by amigobulls.com
Following the drop in price, is Apple stock an attractive long play for 2016? The reasons outlined below show why Apple stock could be considered as a valuable addition to one's portfolio, and why now is a good time to get it at an attractive price before it rebounds in 2016.
Impressive growth rate
Firstly; over the preceding years, the company has outgrown its competitors. The company reported a 22% YoY growth in revenues accompanied by a 38% growth in the bottomline in its latest quarterly report (Q4 2015). Also, Apple spent $17.8 billion on dividends and buybacks in its Q4 2015. This tremendous return of capital demonstrates how the management of Apple prioritizes its shareholder's interests. In this regard, it is evident that Apple's management team are doing their best in order to ensure that shareholders gain ample returns on their stock investments.
China growth
Moreover, the greater portion of revenue for Apple is contributed by the United States and China. This is indicated by a surge in iphone sales which soared by 120% in the last quarter. Consequently, revenue attributed to the iPhone has almost doubled YoY from $6.3 billion in Q4 2014 to $12.5 billion in Q4 2015.
Analyst consensus was for Apple to report Q4 EPS of $1.88 on $51.1 billion in revenue, yet these projections were massively superseded by Apple. Apple announced Q4 earnings of $11.1 billion and a record-breaking revenue of $51.5 billion, a majority of which came from an upsurge in China sales.
