AAPL Soars 17% In A Single Month, Should You Buy The Stock?

We believe there is not much to fear in AAPL stock given its overall Strong operating performance and financial condition. This is aligned with the stock’s High valuation because of which we think it is Fairly Priced. Here is our multi-factor assessment.

But no matter how attractive, investing in a single stock carries high risk. Trefis High Quality Portfolio and is designed to reduce stock-specific risk while giving upside exposure

Let’s get into details of each of the assessed factors but before that, for quick background: With $3.6 Tril in market cap, Apple provides innovative smartphones, computers, tablets, wearables, accessories, and digital services including gaming, music, payments, and financial solutions for consumers and various business sectors.

[1] Valuation Looks High

This table highlights how AAPL is valued vs broader market. For more details see: AAPL Valuation Ratios

[2] Growth Is Moderate

• Apple has seen its top line grow at an average rate of 1.8% over the last 3 years
• Its revenues have grown 6.0% from $386 Bil to $409 Bil in the last 12 months
• Also, its quarterly revenues grew 9.6% to $94 Bil in the most recent quarter from $86 Bil a year ago.

This table highlights how AAPL is growing vs broader market. For more details see: AAPL Revenue Comparison

[3] Profitability Appears Very Strong

• AAPL last 12 month operating income was $130 Bil representing operating margin of 31.9%
• With cash flow margin of 26.6%, it generated nearly $109 Bil in operating cash flow over this period
• For the same period, AAPL generated nearly $99 Bil in net income, suggesting net margin of about 24.3%

This table highlights how AAPL profitability vs broader market. For more details see: AAPL Operating Income Comparison

[4] Financial Stability Looks Very Strong

• AAPL Debt was $102 Bil at the end of the most recent quarter, while its current Market Cap is $3.6 Tril. This implies Debt-to-Equity Ratio of 2.9%
• AAPL Cash (including cash equivalents) makes up $55 Bil of $331 Bil in total Assets. This yields a Cash-to-Assets Ratio of 16.7%

[4] Downturn Resilience Is Strong

AAPL has been more resilient than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• AAPL stock fell 31.3% from a high of $182.01 on 3 January 2022 to $125.02 on 5 January 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 12 June 2023
• Since then, the stock increased to a high of $259.02 on 26 December 2024 , and currently trades at $238.47

 
2020 Covid Pandemic

• AAPL stock fell 31.4% from a high of $81.80 on 12 February 2020 to $56.09 on 23 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 5 June 2020

 
2008 Global Financial Crisis

• AAPL stock fell 60.9% from a high of $7.14 on 28 December 2007 to $2.79 on 20 January 2009 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 21 October 2009

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read AAPL Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – S&P 500, Russell, and S&P midcap. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.