Apple Stock: Is It a Good Buy Right Now?

Stock market lore is replete with stories of how rich you could be if you had bought Apple stock (AAPL) early on. This would be helpful information if investors were time travelers, but they’re not. So the only question that matters is this: Is Apple stock a good buy right now?

To find the answer to that question, consider the company’s present situation, and where it’s likely to go, not where it’s been.

Apple’s Recent Performance

On July 27, Apple released its quarterly earnings for the third quarter of 2021. To say that earnings were good would be an understatement.

Here are some key takeaways, as reported by CNBC:

• Earnings per share (the amount the company earned in the quarter divided by the number of shares outstanding) were $1.30, compared to the expectation of $1.01.

• Revenue was expected to be $73.30 billion, but it was actually $81.4 billion, an increase of 36% over the same quarter last year.

• Revenue for the iPhone product line grew 49.78% over the same period last year, to $39.57 billion. It was expected to be $34.01 billion.

Overall, Apple performed better than analysts expected it to in the third quarter.

Apple has declared a cash dividend of $0.22 per share, payable on Aug. 12 to shareholders of record as of the close of business on Aug. 9. Before you rush out to buy Apple stock in anticipation, however, understand that this dividend has already been priced into the stock’s price. But declaring a dividend is a sign of strength.

Where It Might Be Going

While it’s difficult to determine the future of Apple, there are some things that are known.

As of June 25, Apple had over $35 billion in cash. When a company has a lot of cash, it usually does one of three things with it. It may pay a dividend, which Apple is already doing. But it will still have quite a cash stockpile, so it may buy other companies, or it could buy back shares of its own stock. BBC News reported in February that Apple had bought about 100 companies over the past six years. Apple also likes to buy back stock — to the tune of almost $450 billion in recent years, CNBC reported.

Stock buybacks are beneficial to existing stockholders since they reduce the number of shares outstanding. When you divide the company’s value by a smaller number of shares outstanding, the value of each share rises.

Apple products are very popular, and its customers are very loyal, so the company’s outlook is pretty rosy. But there are always risks, and the current shortage of chips used in iPhones could be cause for concern.

Many companies will state their expectation for their performance for the upcoming quarter when they announce their results for the previous quarter. Apple has not done this for the past six quarters, due to the uncertainty around the pandemic.

What the Analysts Say

You can also get an idea of a stock’s likely performance by looking at what the analysts have to say. These professionals make their living by following the performance of several companies in an industry and making recommendations as to whether investors should buy, hold or sell the stock.

According to Yahoo Finance, of 38 analysts who followed Apple stock in July, 11 rated the stock a “strong buy,” 21 rated it a “buy” and six rated it a “hold.” None of the analysts considered Apple to be an underperformer or recommended that investors sell it.

At the market close on July 27, Apple stock was trading at $146.77. The analysts who follow the stock provide a target price, which they think the stock will reach in the short term. For Apple, those estimates range from $125 to $185 and average $159.34.

Is Apple Stock a Good Buy Now?

Apple has historically been a good performer, and the analysts seem to agree that the stock is worth buying. But any single stock can be volatile, and you should look at each purchase in the context of your entire portfolio.

Apple is a large-cap stock in the technology sector. If your other investments include Facebook, Amazon and Google, you may want to think twice about adding Apple to the mix. On the other hand, if you have a good mix of stocks in other industries, Apple may be a good pick for you.

How To Buy Apple Stock

Here’s a look at the steps to take to buy Apple stock.

Select a Broker and Open an Account

To buy Apple stock, you need to go through a broker. You can use an online broker, like E-Trade, Charles Schwab or TD Ameritrade. Online brokers have low fees, but you won’t get much advice about which stocks to choose.

You could also go to a full-service broker, like Edward Jones or Morgan Stanley. These firms offer advice and financial planning services, but they also have higher fees. And they may require a minimum balance to open an account, depending on the option you choose.

Once you’ve decided what type of broker you want to use, you’ll need to open an account and put some money in it. Then it’s time to start buying.

Consider Ticket Charges and Make Your Purchase

To purchase shares of stock, you’ll need to know the ticker symbol. For Apple, this is AAPL. You’ll also need to know which exchange the stock is traded on. Apple, like many tech stocks, is traded on the Nasdaq exchange.

Decide how many shares you want to buy and make your purchase. You may be charged a fee for each trade, sometimes called a “ticket charge.” Be sure you know how much this is and figure that into the price you’re paying for the shares. If you’re going to be trading frequently, ticket charges should inform your choice of broker — you don’t want to be paying high ticket charges if you’re buying and selling on a daily basis.

Maintain a Balanced Portfolio

Now comes the hard part — waiting. Most stocks, Apple included, will fluctuate in value over time — that’s the nature of investing. But the market always goes up over the long run. It’s tempting to sell at the first sign of a decline, but that’s rarely the best move. Holding stocks for the long term and maintaining a balanced portfolio have always been winning strategies.

This article originally appeared on GOBankingRates.com: Apple Stock: Is It a Good Buy Right Now?