Should You Buy Apple?

Apple is a big deal for Berkshire Hathaway. It's worth $165 billion. That's a lot. They put 48% of their money into it. That's a big chunk. It's the biggest thing they have. The boss man, Warren Buffett, likes Apple. He says it's different from the other stuff they have. In a good way. He likes it because it has good things. Buffett likes those things.

Listen to a stock market expert to make your investments better. Apple stock could be a good choice for three reasons. Despite the rise of 39% this year, investors should think about buying it today.

The iPhone made up 54% of Apple's money in the second quarter of 2023. It's a really successful product. But, Apple has been working on its services too. In the second quarter of 2020, they made $13.3 billion from these services. Now, in the latest quarter, they made $20.9 billion. The services bit grew faster than the products bit.

Apple benefits financially from this. Services have a gross margin of 71%, while products only have 37%. Since more money comes from services, the company will make more profit.

Apple's services bring more benefits to the company. For one, it makes customers more loyal. You might have heard of the Apple ecosystem, where its products work together. There are now over 2 billion active Apple devices. People with these devices tend to stay with Apple and not switch to other brands. This is because Apple's services like Music, Pay, and TV+ make them stay.

Buffett says a great company can increase prices without hurting sales. He thinks that if you need to pray before raising prices, your business is bad.

Berkshire Hathaway likes Apple's prices. The iPhone has been getting more expensive since 2007, but people still buy it.

Services' prices have gone up. Apple made hardware items with unique easy-to-use software, which looks good. Because of it, Apple has become able to charge more.

Achieving A Strong Financial Profile

The economy is uncertain and people worry about a recession. Inflation is high and interest rates are going up. It's smart to invest in companies that are financially stable and reliable. Apple is one of those companies.

Apple's profit margins have increased significantly from 2017 to 2022. Gross margin rose from 38.5% to 43.3%, and the operating margin jumped from 26.8% to 30.3%. This is great news for the company because it shows that they are becoming more profitable as they grow. Apple is benefiting from economies of scale and cost optimization. The consumer hardware industry is tough financially, but Apple is doing exceptionally well and stands out from the crowd.

This company makes lots of money, over $111 billion in fiscal 2022. They give some of that money back to shareholders. In the last six months, they bought back $39 billion worth of shares. They also pay a dividend, which is currently 0.5%.

The reasons to invest in Apple are very convincing. It could be a good investment for a long time.

Neil Patel works at Berkshire Hathaway. The Motley Fool supports Apple and Berkshire Hathaway and has a disclosure policy.