Citigroup (NYSE:C) analyst Jim Suva predicts that Apple (NASDAQ:AAPL) could announce an $80 billion to $90 billion buyback and increase its dividend by 5% to 10%. In turn, AAPL stock opened at $168.02 after closing at $165.75 Monday evening, and now sits at a little more than $167 per share. However, the Apple dividend increase and buyback potential could have AAPL stock rising before and after its next earnings report — scheduled for April 28.
Of course, Apple is not new to share repurchases. Apple spent $85.5 billion on buying stock and $14.5 billion on dividends in its most recent fiscal year, which ended in September of last year. However, this is just the first step in their plan to grow and evolve.
Most tech giants, including Apple, are cash cows. Apple has a lot of cash sitting in its coffers right now. In fact, their total cash hoards are at $202.6 billion, and they’ve got investments piling up by the minute.
Furthermore, Citibank analysts say that Apple’s stock is undervalued and not considering the company’s potential. Jim Suva said the company is releasing some really exciting gadgets in the future, particularly augmented-reality/virtual-reality headsets and a new Apple car. However, shares aren’t reflecting this right now.
In addition, Apple stock and the other major indices were buoyant after a report indicated that core inflation increased less than expected in March.
According to evidence from the U.S. Labor Department, prices for everyday items kept increasing in March to their highest levels since the late 1980s. However, inflation data showed that the month-to-month growth was less than expected.
Is Apple a Buy Hold or Sell?
Overall, Apple is a great company that has been consistently innovating and improving its products. In turn, the share price of AAPL stock keeps going up and the shares are becoming more valuable every day. The firm innovates quickly and continues to grow with the times to stay competitive against other tech-based businesses.
Moreover, despite the worldwide supply chain issues, Apple was able to power through. Despite parts shortages, Apple shattered its revenue record, sales upped 11% to $124 billion, and profit grew from $28.7 billion to $34.6 billion. With that in mind, Apple has made a habit of outshining analyst estimates. The company sets the pace for innovation and beats competitors in virtually every measure.
Thus, based on the company’s current trends and future promises, AAPL stock could be worth a lot in the future. However, timing is everything when it comes to Apple. The next catalyst coming up for the tech giant is its second-quarter results, scheduled for after the closing bell on April 28.
That said, according to one analysis, when Apple posts a better-than-expected earnings report, the stock usually drops by almost 1% the next day. When earnings are reported, a pop tends to happen. After that, however, there is a dip and then an eventual runup to the next earnings report.
You can understand the trend by looking at the accompanying chart, which shows a similar performance pattern, with squares denoting earnings.
So, collectively, AAPL stock has all the ingredients to provide another exceptional earnings report. Therefore, you should invest in AAPL now as it gears up for its upcoming earnings release.
On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience in analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.