Yesterday, Apple Inc. (NASDAQ:AAPL) reached a major milestone, making its trading debut on the Dow Jones Industrial Average. Apple replaced AT&T Inc. (NYSE:T). While it may have been AAPL’s first day trading on the prestigious Dow, it has already claimed a spot in the top five of the 30 stocks in the index.
The other four stocks comprising the top five include Goldman Sachs Group Inc (NYSE:GS), 3M Co(NYSE:MMM), International Business Machines Corp.(NYSE:IBM) and Boeing Co (NYSE:BA). So, AAPL is in good company.
You could say that Apple has come a long way from its humble beginnings in Steve Job’s parent’s garage, and Apple shares have also come quite a ways in 2015 alone.
AAPL has had a shaky start to 2015. Lower-than-expected retail sales in the final months of 2014 had investors wary of retail stocks, even Apple — and as a result, shares traded in a herky jerky manner in January. But Apple has quickly earned the title of the “comeback” stock, and there’s a good reason why…
In the first quarter, Apple’s net sales increased nearly 30% to $74.60 billion from last year, while earnings jumped 38% to $18 billion, or $3.06 per share. This beat analysts’ estimates of $2.60 earnings-per-share on revenues of $67.69 billion. So, following the report, AAPL shares surged 9% in two days and haven’t looked back, rising 18% since the end of January.
The next earnings date is tentatively scheduled for April 22, and I can hardly wait. In the second quarter, Apple expects revenues between $52 billion and $55 billion. Analysts are looking for 27% annual earnings growth and 21% annual sales growth, and they’ve revised their earnings estimates 6% higher in the past three months, which bodes well for another earnings surprise.
Apple also recently increased its stock buyback program to a whopping $90 billion. In the last quarter alone, Apple bought back $8 billion of AAPL stock. Between dividend payments and share repurchases, Apple expects to return $130 billion to shareholders by the end of 2015. This is a major reason why I chose Apple as my best stock pick for 2015, and I’m so glad I did. AAPL shares are now up 16% from my recommended buy price.
Apple stock also continues to earn top marks in Portfolio Grader. Since last March, AAPL has remained in “buy” territory. And it’s not surprising, considering that AAPL has been successful in turning around its balance sheet and attracting more institutional buying pressure.
AAPL currently receives an A for its Quantitative Grade, placing the stock firmly in “strong buy” territory. Meanwhile, AAPL stock earns a B for its Fundamental Grade, thanks to strong sales growth (A), earnings growth (B), earnings momentum (B), earnings surprises (B), cash flow (B), analyst earnings revisions (A) and return on equity (A).
For the moment, Apple could improve operating margin growth (C), but I expect these grades will firm up with the next quarterly report. So, given that AAPL shares dipped slightly yesterday with the overall market, this is the perfect opportunity to buy shares of a stock with a proven record of bouncing back.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
