Apple (AAPL 0.81%) just became the first company to reach a market cap of $3 trillion. The stock recently hit new highs on the back of strong iPhone 13 sales, but there's more to come.

Analysts expect the tech giant to launch two new products in the next few years, including a foldable phone. Apple is still very much in growth mode with annual free cash flow approaching $100 billion a year. Here's why shares are worth buying to start 2022.

A shop owner using a computer and tablet at work.

Image source: Getty Images.

1. The iPhone 13 is a homerun

Apple has navigated the supply chain disruptions well. In the fiscal fourth quarter (ended Sept. 25), revenue increased 29% year over year, despite CEO Tim Cook describing last quarter's supply constraints as "larger than expected." Investors can credit surging demand for everything Apple, as sales of the Mac, iPhone, iPad, wearables, home, and accessories all hit records last quarter, and that momentum likely continued through the holidays.

In December, a Morgan Stanley analyst noted iPhone shipment growth in China was up 46% year over year through November. Moreover, through the holidays, order lead times for the iPhone 13 were trending down to just two days from nearly three weeks after its launch. 

Analysts currently expect revenue to increase 6% year over year for the fiscal 2022 first quarter with adjusted earnings per share reaching $1.88, up from $1.68 in the year-ago period. 

2. New products

Investors are underestimating the strength of the current 5G upgrade cycle. During Verizon's third-quarter earnings call, CEO Hans Vestberg said customers are adopting 5G much faster than 4G. So far, 25% of the consumer phone base is using 5G-enabled devices, up from 10% within the first year after 4G launched. 

And if the 5G upgrades slow in a few years, Apple could announce a foldable smartphone in 2023, according to reports. This wouldn't be surprising, since Samsung already has the foldable Galaxy Z Fold3 and Flip3 phones, and Apple is usually late to the party in terms of hardware innovation. But when Apple finally arrives, it usually implements a new technology better than competitors.

For example, Samsung's Galaxy Z foldable phones have been criticized for weak battery life and a crease where the screen folds. My guess is Apple's foldable device won't have such shortcomings, given the longer development time, and that could make its release the most popular foldable phone on the market.

The company is also expected to announce its long-rumored virtual reality/augmented reality headset this year. An Apple headset might not be available to buy until 2023, but this product could drive sales on a similar level as other Apple wearables, which currently represent about 10% of the top line (along with the home and accessories categories). 

3. Growing free cash flow, buybacks, and dividends

The stock is not cheap, but at a price-to-free cash flow ratio of 31, it's difficult to make the case Apple is overvalued. 

The company is approaching $100 billion in annual free cash flow, and management is returning it all to shareholders. Over the last year, Apple spent $84.9 billion on share repurchases and $14.5 billion on dividends, bringing the dividend yield to 0.51%. When we consider that Apple's free cash flow continues to grow, up 55% over the last three years, the stock can climb without any expansion of the valuation multiple.

What's more, the share repurchases are working as intended, reducing shares outstanding and therefore providing more free cash flow on a per-share basis. Over the last three years, Apple's free cash flow per share is up 77%. 

Further 5G upgrades, new product demand, and continued growth in the higher-margin services segment should drive even stronger free cash flow over the next several years, sending the stock higher.

Of course, an economic recession or major market correction may cause Apple's stock price to fall before it rises. But these are the short-term risks we all accept as investors. If you buy shares of Apple today with the intent to hold them long term, you'll be in a strong position to earn an attractive return on your investment that parallels the underlying growth of this business.