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.

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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.

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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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

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