Looking at AAPLs fundamentals and the pile of cash they are about to be sitting on due to the tax bill makes me think AAPL might be a good investment moving forward. The valuation is also excellent relative to other popular companies. Here's why I don't want to put my money in just yet.
The biggest risk I see is that 70% of Apple's revenue comes from iPhone sales. I think iPhones are great, in fact I'm typing this on my iPhone right now. The iPhone X is too expensive and there has been bad publicity surrounding iPhone batteries lately which could eat into their sales numbers. Selling at over $1000 is a deal breaker for me and I would strongly consider taking my business to Samsung if it was time for a new phone. I can only imagine other consumers must feel the same way.
Additionally, part of the reason the company is so profitable is because the profit margins on iPhones are huge at about 60%. Apple is clearly a master of marketing and maintaining a strong customer base. I worry that the next time there's an economic downturn, no one is going to be able to afford these luxury products and Apple will have to drastically lower its profit margins in order to stay competitive. Additionally, there may be new, cheap smartphones which may not be as powerful as an iPhone, but gets the job done. I'm thinking like how an amazon fire 7 for $50 is expected to compete with the Apple iPad for $300+.
Lastly and least importantly, looking at the max history of the AAPL stock price charts shows that the company tends to fall out of favor for long periods of time every few years. I don't know much about technical analysis, but based on recent news it seems like the company could be at a turning point once again.
I really do want to invest in this company based on the amount of cash they'll be sitting on for reinvestment, the amount of cash that continues pouring in, and the strength of the brand name, but for these reasons I feel like I shouldn't.
Submitted January 01, 2018 at 03:21PM by InvestingLifeSavings http://ift.tt/2qbdWh4
