Apple (AAPL 0.87%) has featured in countless headlines this month after unveiling its long-awaited, virtual/augmented reality (VR/AR) headset, the Vision Pro. The company's stock rose about 7% in the last 30 days, largely thanks to the long-term potential of the device.
However, even without the growth prospects of the Vision Pro, Apple's stock is too good to pass up. The company is home to leading market shares in multiple areas of consumer tech. Meanwhile, its immense brand loyalty with shoppers often leads to success in nearly any new market it enters.
Apple users seem intent on sticking with the company no matter what upgrades its competitors unveil. As a result, now is an excellent time to consider investing in this tech giant before its stock climbs any higher.
Here are three things about Apple that smart investors know.
1. It could take years for the Vision Pro to boost earnings
In true Apple fashion, the Vision Pro has taken leaps in innovation, introducing features never before seen in competing headsets. Characteristics such as advanced hand and eye tracking negate the need for controllers. Meanwhile, the Vision Pro is equipped with the same chip as the current MacBook Air, allowing it to perform nearly all the same computing tasks.
Alongside Apple's full range of popular apps like Facetime and Messages, the headset could be unstoppable against industry competitors like Meta and Sony. However, its hefty price tag of $3,499 will likely hold it back for a few years.
NASDAQ: AAPL
Key Data Points
Apple has unveiled the Vision Pro at a price point that locked out the average consumer. The company's product strategy is likely to release yearly upgrades to the device, bringing down the price of the current headset. However, that means it could be several years before most shoppers consider adopting VR/AR into their daily lives.
In the meantime, Apple will need to push its VR/AR technology forward to boost hype so that consumers show up in droves once the Vision Pro is at a more convenient starting price.
2. A booming services business
The good news for those concerned about the short-term prospects of the Vision Pro is that Apple's growing services business is gradually allowing it to lean less on product sales. Digital subscription platforms like Apple TV+, Music, Fitness+, News+, and more have seen the company's services business become its second-highest earning segment.
In fiscal 2022, services reported revenue growth of 14%, double that of the iPhone (its largest earning segment). Meanwhile, the digital nature of the business allows for lucrative profit margins, with the segment hitting 72% last year. Comparatively, products' profit margins came in at 36%.
Moreover, Apple is gradually expanding its services into the fintech arena. In 2019, the company launched its first credit card. Then this year, the iPhone company introduced a buy now, pay later program and a new savings account.
Apple's expansion beyond physical products diversifies its business and strengthens earnings in the event of short-term headwinds, such as supply chain issues or reductions in consumer spending.
3. A better value than its competitors
Despite being home to the world's highest market cap at $2.9 trillion, Apple's stock is still a better value than most of its competitors.
The chart below illustrates how the company has the lowest price-to-earnings (P/E) ratio among fellow tech giants like Amazon, Microsoft, and Meta. While a P/E ratio of 31 doesn't represent a massive bargain, it still indicates Apple is trading at the best value compared to these companies.
Data by YCharts.
Moreover, Apple's price-to-free-cash-flow ratio of 30 is the lowest among these tech giants, which could suggest it is also in the best financial standing.
Apple shares have risen 292% in the last five years alone. Its history of reliable gains alongside consistent demand for its products makes it one of the best stocks to hold indefinitely. So if you're looking to add a new tech stock, Apple shares are worth considering while they're trading at a better value than the competition.
