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Founded in 1993 by brothers Tom and David Gardner, The Motley Fool is helping millions of people achieve monetary freedom through our website, podcasts, books, newspaper columns, radio shows and premium investment services.
Apple’s percentage value (AAPL 0. 71%) is already up 45% this year, propelling it to a valuation of over $3 trillion. The tech giant’s percentages are traded as if it’s still a high-growth startup, even though those days seem to be gone. Given all this immediate growth, some are wondering if stocks have already peaked by 2023.
Is Apple still an investment opportunity, even at an inflated price?
Over the past decade, Apple has averaged a profit expansion rate of about 10%. And that’s with the tech company enjoying a surge in pandemic activity. But with the economy returning to more general degrees in many ways, Apple’s rate of expansion is now below average and has even turned negative in recent quarters:
For the three months ended April 1, Apple’s quarterly profit fell 2. 5% year-over-year. While services profits reached a record $20. 9 billion, they grew only 5. 5% year-over-year. Apple’s diluted earnings correspond to a constant percentage of $1. 52 for the same period reported a year ago.
Apple’s inventory market gains this year have eclipsed the S.
Between 2021 and 2022, meme shares were all the rage and investors were paying obscene valuations for investments, so Apple’s P/E multiple at the time also inflated.
With more than 30 times its profits, Apple is expected to generate a strong rate of expansion. Instead, their sales have declined and this trend could continue. Analysts’ consensus value target for Apple’s inventory is just above $181, which is lower than Monday’s close ($188. 61).
The consensus of analysts suggests some threat of trouble for prices, but there may be even more threats of trouble for stocks, especially if the economy falls into recession this year and Apple’s business struggles even more than in recent times.
Although Apple has announced the Vision Pro headphones, I’m not convinced it’s a huge opportunity for the company. Spending on the metaverse and headphones is what has weighed on the Meta Platforms bottom line in recent years, and it may pose a similar challenge for Apple if it delves too far into this business. What has made Apple a success over the years is that it makes products that are easy to use and appealing to the masses. Inflation has led consumers to tighten their budgets and ordering a $3,500 headset may also be in short supply.
Apple’s products and facilities in general may falter in the long run as consumers reduce their spending. In addition, investors have in mind that student loan payments will resume later this year, which may mean an even less discretionary source of income for consumers, creating another potential hurdle for Apple.
For Apple to enter the industry with such a high valuation, the company would have to operate at full capacity and grow at an impressive rate, with much more expansion on the horizon. And obviously that’s not the case. While its basics are still solid and it’s an incredibly successful and successful business, the value is too high for it to be a smart purchase right now.
If you have Apple inventory in your portfolio, this can be an investment to hold for the long term. But potential investors would prefer to buy other expansion inventories where they can get more bang for their buck.
Randi Zuckerberg, a former chief market officer and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a board member of The Motley Fool. David Jagielski has no charge in any of the actions mentioned. The Motley Fool holds positions and recommends the Apple and Meta platforms. The Motley Fool has a disclosure policy.
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