Apple Inc. (NASDAQ:AAPL) is a perennial favorite for investors, and that includes Warren Buffett, who first invested in AAPL stock back in 2016.
Now Buffett and Berkshire Hathaway Inc. (NYSE:BRK.A, NYSE:BRK.B) own a nice 2.5% stake in Apple stock after continued investment. And as Apple Inc. has continued to boost its dividend, you can be sure that the Oracle of Omaha will buy even more AAPL stock in the future.
So should you.
There are admittedly concerns about Apple stock right now. The company has declined a bit from its June highs on fears that bulls got ahead of themselves.
And with the iPhone 8 launch around the corner, some investors booked their profits early since a big success seems to be priced in already.
Why You Should Buy AAPL Stock Now
But don’t confuse the pause in the Apple Inc. rally with a crash. Here are five clear reasons to stick with AAPL stock:
- Long-Term Momentum: Apple shares are up about 25% year-to-date to roughly triple the broader market’s returns. Beyond 2017 returns, AAPL is up 50% in the last three years, more than double the profit of the S&P 500 in the same period.
- AAPL Stock Valuation: Despite that, the tech icon is trading with a forward P/E ratio of about 14 right now — a nice discount to the S&P 500’s forward P/E of about 20.
- Capital Return: There’s also its aggressive return of capital program, which is nearly $99 billion across the last two years via buybacks and a dividend that adds up to a 1.7% yield at present.
- Cash Hoard Is Still Huge: For long-term investors, Apple’s roughly $250 billion cash hoard is all also a big plus. Not only will this stockpile fun plenty of future dividends and buybacks, but will keep the company stable and fund future innovation. Continued talk of a tax break for corporate America could also mean AAPL stock holders see more of that capital delivered back to them and less in the hands of the IRS.
- Apple Is Still Growing: Don’t think it’s just a value and income argument for AAPL, either. The company is still posting impressive growth, as earnings are on pace to jump almost 8% in 2017 and another 18% in 2018.
Shares of AAPL stock may have softened a bit lately in anticipation of the new iPhone launch, but don’t let that fool you into thinking Apple is weak.
Shares have outperformed nicely in 2017, and will continue to do so into 2018 and beyond.
As of this writing, Jeff Reeves does not own a position in any of the stocks mentioned here.