How to Buy Apple Stock in 2021
With a market capitalization of $2.1 trillion in February 2021, Apple was the most valuable company in the world, and legendary investor Warren Buffett once described the company as a “family jewel”. The popular phone and personal computer maker has transformed into a tech colossus with tentacles everywhere: from smart digital devices (iPhone, iPad, Mac, and Apple Watch) to movie and music streaming services and electric car technology. Here’s our guide to buying Apple stock.
Learn How to Buy Apple Stocks in 3 Easy Steps
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Analyze the Apple Stock Price Chart
Assuming your fundamental analysis has shown the company to be in sound financial health, which is why you are thinking of buying it, check out its price chart to determine the best time to buy Apple stock. Your trading style — day trading, swing trading, or position trading — will determine the timeframe to use for your chart analysis.
When the time is right, specify the size of your trade (in terms of the number of shares, amount of money, or CFD stake size) and hit the “buy” button for the stock. If you’re buying based on technicals (i.e., the price chart analysis) rather than fundamentals, remember to add a stop-loss order that will limit your losses if the market goes against your position.
Apple Company Overview
Apple Inc. is an American multinational technology company headquartered in California, United States. Apple designs, manufactures, and sells smartphones (iPhone), tablets (iPad), personal computers (Mac), software, and other digital devices, including smartwatches. The company has diversified into movie/music streaming and planning to go into electric cars and driverless technology.
Apple was the first company to surpass the $1 trillion mark, a feat it achieved in August 2018. With a $2.1 trn market capitalization in February 2021, Apple became the most valuable company in the United States. The company is the fourth-largest PC vendor and smartphone manufacturer in the world by unit sales. It is currently researching electric cars and autonomous driving in the hope of building its own electric vehicle.
Apple has high brand loyalty, with 1.65 billion active devices globally as of February 2021.
Apple Business Model and Revenue Streams
Apple's astronomic growth in revenue and income were originally driven by strong sales of its iPhone products. The iPhone segment is the company's largest, accounting for almost a quarter of the company's revenue. Apple generated $26.44bn in revenue from iPhone sales in Q4 of the 2020 financial year.
Recently, Apple's services segment has become the fastest-growing segment of the company. The service segment currently accounts for about 17% of Apple's revenue, putting it ahead of Mac, iPad, and Home accessories segments. In Q4 2020, the service segment generated a total of $14.55bn, accounting for 13% of the total revenue generated in that quarter. These services include iTunes, AppleCare, and Apple Pay.
The growth in the services segment is a ripple effect of the company's investment in research and development. Apple spent a whopping $18.75bn on R&D in the 2020 fiscal year, an increment of about $2.5 billion from the previous year. Overall, Apple’s services segment has shown strong growth over the last few years, trailing the company's largest segment, the iPhone.
By focusing on the service segment, Apple has been able to grow from a phone marker to one of the world's leading providers of digital services.
History of Apple
On April 1, 1976, Steve Jobs, Steve Wozniak, and Ronald Wayne founded the Apple Computer Company. There are two seemingly conflicting accounts on how they settled for the name Apple.
According to Steve Jobs, the company's name was inspired by his visit to an apple farm while on a fruitarian diet. Jobs thought the name "Apple'' was "fun, spirited, and not intimidating". However, in his autobiography, Steve Wozniak stated that they chose Apple because they could not come up with a better “technical-sounding" name.
To finance the company's first product — Apple I, a computer designed and hand-built by Wozniak — Jobs sold his VW Microbus car for a few hundred dollars, while Wozniak sold his HP-65 calculator for US$500. Apple I was sold for US$666.66.
Apple Computer, Inc. was incorporated on January 3, 1977, without Wayne who sold his 10% stake in the company back to Jobs and Wozniak for $800 only twelve days after having co-founded Apple.
During the first five years of operations, revenues grew exponentially, doubling about every four months. Between September 1977 and September 1980, yearly sales grew from $775,000 to $118 million, an average annual growth rate of 533%.
On December 12, 1980, Apple went public under the ticker symbol "AAPL" in a blockbuster IPO that generated over $100 million. This was more capital than any IPO since Ford Motor Company went public in 1956, and by the end of the day, Apple's market cap was over a billion dollars.
In 2001, Apple debuted the iPod portable digital audio player, and in 2003, the iTunes Store was launched and became the world's largest music retailer two years later. Steve Jobs announced the change of the company's name from Apple Computer, Inc. to "Apple Inc." at the Macworld Expo in 2007. This announcement signified a shift in the company's business model from computers to consumer electronics, which was crowned with the release of the iPhone brand and the launch of Apple TV. About 270,000 iPhones were sold in the first 30 hours of sales symbolizing a game-changer for the mobile phone industry. Since then, Apple has expanded into other areas, such as chip-making, digital wearable devices, artificial intelligence, electric vehicles, and autonomous driving.
Brokers that Offer Apple Shares
All stockbrokers that have direct or indirect (via a partner stockbroker) access to the Nasdaq exchange and other stock exchanges where Apple is traded offer the shares for trading. However, we have compiled a list of the best brokers offering Apple shares, after considering certain factors, such as trading cost, security, research tools, and user experience.
Should I Invest in Apple Stock?
Apple has consistently managed to grow its revenue and profit each year. Given the way the company diversifies its business, Apple is one of those growth stocks that you don't just trade but buy and hold for the long term.
Apple Stock Investment Potential
Apple has opportunities for growth in many areas, which makes the stock a good one to own. Though the iPhone business seems to be slowing, the company is positioning itself as a digital services firm, which shows its ability to adapt to changing trends.
Apple's services and wearables segments continue to grow and have opened up multiple income streams for the company in the long term. The company also has ambitious projects in electric vehicles, autonomous driving, and artificial intelligence. Moreover, Apple has a long track record of business efficiency and profitability. Considering all these factors, Apple has good long-term investment potential.
What Kinds of Investors Should Include Apple Stock in Their Portfolios?
A stock like Apple with significant long-term potential appeals to many types of investors. Those seeking a blend of value and growth can readily find such in Apple. In fact, Apple has had to undergo more than one share split to make its stock more affordable to investors because of its rising share price. Due to the company's outlook and the growing diversification of its core business model, Apple stock appeals more to long-term investors rather than short term swing traders or day traders.
How Much Should I Invest in Apple?
The amount you invest in shares of apple depends on your disposable income because experts advise that you invest only what you can afford to lose. Budget how much of your income you want to set aside to build your investment portfolio, but do not allocate more than 2% of that amount to any single stock in one trade.
How to Buy Shares in Apple Stock?
You can buy shares of any publicly traded company via a stockbroker, but for some companies, you may also be able to buy directly from the company through what is known as a direct stock purchase plan (DSPP). Unfortunately, Apple does not have DSPP for investors. The closest it has is an Employee Stock Purchase Plan, which allows employees to acquire Apple shares for 85% of their fair market value. Other investors can only buy the shares through a stockbroker.
Buy Apple Shares Using a Broker
Some of the factors to consider when choosing a stockbroker include access to the exchange, acceptability in your country of residence, trading fees and commission, security features, and user experience. Once you identify a broker that meets these requirements, you can open an account on their trading platform. The procedure for opening a brokerage account is somewhat uniform among brokers. A legal declaration of age, contact details, and a valid form of identity are usually required by all brokers.
Once your account has been approved, deposit funds and start trading. You can choose to place a market order or set a limit order and a predetermined price and wait for it to hit. When you purchase Apple shares through a broker, your order is sent to the exchange floor where it is executed.
Frequently Asked Questions
Apple is positioning itself as a digital services firm, with services and wearables segments opening up multiple income streams for the company in the long term. The company also has ambitious projects in electric vehicles, autonomous driving, and artificial intelligence. All these make Apple a good stock to buy and hold in 2021.
Apple is one of the most profitable companies in the United States due to surging demand for the iPhone and the growth of its services and wearable segments. The company made a profit of $57.4bn from a revenue of $274.5bn in the 2020 fiscal year.
Yes, Apple has been paying cash dividends since 1987, and it has been almost consistent with that. For the last five years, Apple has declared dividends every quarter.
Yes! Fundamental analysis helps you to determine the financial health of the company, but you need to perform technical analysis to know the right time to buy. Depending on your trading strategy, you can buy on a pullback to a support level or the breakout of a resistance level.
Apple stock is primarily listed on the Nasdaq exchange. However, the stock is also traded on the Xetra exchange in Germany and Bolsas y Mercados Argentinos.
The golden rule is to invest only an amount you can afford to lose and do not commit more than 2% of your investment capital to any single trade. If you’re trading rather than investing, always place a stop-loss order so you don’t lose more than you intended to risk, but be careful not to set the stop loss too close to your entry level nor too far from it.