Buying Apple Stock: What You Need To Know

Estimated read time: 5 minutes

If you had a time machine, you'd hop in it and go back to when you could snatch up cheap Apple stock. You'd be rich beyond your wildest dreams then. Those days of buying Apple stock at affordable prices are long gone, but that doesn't make it a bad investment now.

It just means you have to give it more consideration before forking over all that money for shares. Before buying at today's prices, you need to carefully examine the situation and determine whether a bite of the Apple is a good investment for you or not.

AAPL: An Investor Profile

People who buy Apple stocks tend to be the more conservative type of investor. It's a proven company that has produced some of the biggest products of our time, so it attracts investors on name recognition alone.

Whether you want to opt for stock in Apple can depend upon what type of investor you are. Some people feel that such a ground-breaking company which has enjoyed success for so many years is always a good long-term bet. They'll buy the stock and ride out the fluctuations because they believe it is a sound investment to hold.

Others believe Apple isn't a great investment because it'll never be the next big thing again. It's a giant in the industry already.

Pros and Cons of AAPL

As of late February 2019, Apple was going for more than $170 per share. That makes Apple a major investment for most people, which is why it's good to think about it from all angles.

Although it is now up in the same ballpark as it was last year at this time, there were some sizable fluctuations in the past year, with stocks reaching in excess of $220 a share and lows in the $140 range per share.

Should you invest in Apple now? Let's look at the pros and cons.

Pros

Pros
Apple is down considerably per share from its high last year. That can mean you have the chance to snatch some of that stock up while it's less expensive than it has been in the past.
It's viewed as the top contender in streaming music. iTunes is the gold standard for streaming services, and that's unlikely to change anytime soon.
Apple is generally viewed as a conservative investment. If you're looking for some stability in your portfolio, this might be a good pick.
It's a source of dividend revenues.
It's seen as a solid bet for long-term investors.
Cons
If you're looking for rapid growth from the next big thing, you should look elsewhere.
The leadership isn't what it once was. There aren't many Steve Jobs types out there who can reinvigorate a failing company the way he did for Apple. Apple's success was largely due to Jobs, and while CEO Tim Cook is an effective leader, he doesn't appear to be as much of a visionary as Jobs was.
Apple is coming off a disappointing holiday season in sales of the iPhone. While that doesn't mean it won't rebound, it's something to keep in mind.

Before You Invest

Because Apple stock isn't cheap, you need to understand a few things before determining if that stock is a good fit for you, or even how much you want to buy.

Although iPhones didn't sell as briskly as anticipated, the company still did well with the sales, including the iPhone XS Max, which retailed for more than $1,000. People are willing to spend that much on an iPhone, which speaks volumes about Apple's reputation and popularity. It's still an iconic brand, and that reputation isn't likely to go away. That kind of consumer confidence is a good sign, and it makes it much easier for investors to feel good about owning that stock.

Another thing you need to understand is that Apple, which has been transparent about how many iPhones it sells each quarter, has decided to stop releasing how many phones it sells. If you're the type of investor who likes to have all that information at hand before deciding how many shares to buy, you'll be out of luck.

Finally, as we mentioned earlier, you should be aware Apple stocks pay dividends — that's one of the stock's hidden benefits that new investors might not realize. If a company says it will pay a 60 cent dividend for a particular quarter, and you own 10 shares, you'll get $6 for that quarter.

Obviously, if you own a lot of shares, the money from dividends can add up. That can amount to a modest income stream, depending upon how many shares you own in a company. If you don't want that dividend as a source of income, you can reinvest it.

For Current Shareholders

If you already own Apple shares, you may be wondering what to do with them. Should you continue to hold them, or sell at least some of them off? Because there has been some volatility and bad press for Apple in the past year, it's a fair concern. Instead of making an emotional investing decision or doing what your fellow investors are doing, you need to look at the facts.

Warren Buffett, CEO of Berkshire Hathaway, still has enormous confidence in Apple. That should be reason enough for you to weather any short-term storms the stocks are having. Buffett isn't just saying that either — he made a major investment in the company.

In 2018, his company bought in the neighborhood of 75 million shares of Apple stock. At that point, he already owned approximately 165 million shares in the company. Buffett felt confident enough to buy those shares because of the profit Apple continues to earn.

While following the actions of ill-informed investors is usually a bad move, Buffett doesn't fall into that category. He is widely regarded as one of the best investors of all time, and he's clearly comfortable spending money on tech. He put a major show of confidence into Apple stock. That gives investors a clue that perhaps they shouldn't react emotionally and sell off their stock in the company just yet.

Apple Isn't Done Yet

While your days of getting cheap Apple stock are likely over, the company is still a solid investment. Their new products are always highly anticipated, and people are willing to pay top dollar for them.

For the time being, big investors like Warren Buffett still think Apple is bringing a lot to the table. That should hold some sway when it comes time to decide whether to buy more Apple stock or at least keep holding on to the shares you have.