3 Reasons to Buy Apple Stock Today

Apple's business is in better shape than most people think and its stock is a great value for investors.

Apr 16, 2014 at 2:05PM

Apple's (NASDAQ:AAPL) stock hasn't gone much of anywhere for nearly three years even though the company is constantly pumping out cash.

AAPL Chart

AAPL data by YCharts.

Maybe it's the fact that Apple's recent products haven't wowed the market, growth has slowed, and competitors are catching the tech juggernaut on all fronts. Despite these challenges, there are a few reasons Apple is still a great buy today, especially for investors looking for value.

Aapl Ios Image

Despite losing market share, Apple's tablets are still the most popular in the world. Image courtesy of Apple.

iPad still rules tablets
The iPad no longer dominates market share now that Google's (NASDAQ:GOOG) (NASDAQ:GOOGL) Android operating system is spreading, but it's still the best, most profitable tablet out there. According to Gartner, the iPad's market share in tablets worldwide fell from 52.8% in 2012 to 36% in 2013, but unit volume was still up 14.5% to 70 million. And consumers are using their iPads far more than cheaper Android-based tablets.  

Monetate found that the iPad accounted for 87.5% of tablet e-commerce traffic in the fourth quarter of 2013, down only slightly from 91.1% a year earlier. A similar report from IBM showed that iOS users spent $93.94 per online purchase order in the 2013 holiday season, nearly double the $48.10 from Android users; 23% of all online sales came from iOS devices, compared to just 4.6% from Android. Ironically, Google is the standard search engine for iPads, so when all revenue sources are considered Google probably makes more from iPads than Android devices thanks to that revenue stream. 

Safari also accounts for 54% of mobile browsing, according to NetMarketShare. Apple users are using their devices more than Android users, and an ecosystem that will keep users buying new devices and apps is great for Apple's long-term prospects.

Aapl Tv Image

The interconnection between all of Apple's devices keep users hooked. Image courtesy of Apple.

Apple's ecosystem is second to none
Once people do buy Apple devices the ecosystem of apps and services is hard to leave. The iCloud, App Store, iTunes, and other services make it easy to transfer data and purchases across the ecosystem, and to upgrade to the latest device. Leaving the ecosystem would force that to all be rebuilt elsewhere.

It's not just Apple's services that keep people hooked. Developers prefer the iOS system, which has the higher-paying customers. These developers create the popular apps that draw more users to Apple's platforms. 

As Apple adds more services like free office software and expanded cloud support, it becomes even more difficult to leave an ecosystem in which you've spent hundreds or thousands of dollars on apps, movies, and more. So people will stay, which is a great competitive advantage for Apple, especially as it expands into new businesses.

TV is on its way
I'll be the first to admit to being disappointed by the slow launch of a more advanced Apple TV. I believe the television market could be as big for Apple as either the iPhone or iPad, and Steve Jobs said years ago that Apple had already cracked the code for this sector.

When Apple does finally release a new Apple TV or iTV, it will be a great growth opportunity and add to that ecosystem I pointed to above. A whole new world of apps will open up, connectivity with its own devices will improve, and Apple could be the center of home entertainment. 

What's great about TV for Apple is that it's almost pure upside. The Apple TV just passed the $1 billion mark in revenue, which CEO Tim Cook says makes it more than a hobby, but there's still a lot of room to grow. 

Apple's stock is a buy today
Apple may not dominate tablets or smartphones the way it used to, but it still dominates at making money selling tablets and smartphones. In the past year alone, Apple has made $37 billion in net income, generated $52.9 billion in operating cash flow, and had $158.8 billion in cash as of the end of the year.

I see the competitive moat as too strong and the value too good to avoid Apple's stock today. It may not be the highflier it once was, but it's a great value and has tremendous upside if Apple can get its move into TV right.

How to play the war for your living room
Apple isn't the only one with an eye on your living room and the opportunity for those who can is huge. There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of those dollars, but that won't last and when cable falters, three companies are poised to benefit. Click here for their names.  

Travis Hoium manages an account that owns shares of Apple. The Motley Fool recommends Apple and Google-Class C Shares. The Motley Fool owns shares of Apple, Google-Class C Shares, and International Business Machines. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers