For many, investing in the stock market is daunting.
With thousands of companies to choose from, where should you start?
If you’re dipping your toes for the first time into shares, Apple (NASDAQ: AAPL) offers a compelling choice for a number of reasons.
Brand recognition brings in the big bucks
Apple is one of the most recognisable brands on the planet.
The company’s slate of products, such as the iPhone, the iPad, and MacBooks, are coveted worldwide.
Apple’s brand recognition translates to a level of business stability not found in many smaller or emerging companies.
The popularity of its products shows up in its financials.
For its latest fiscal 2023 (FY2023) ending 30 September 2023, the company generated revenue of US$383.3 billion.
Not just an iPhone company
While Apple is well-known for its iPhone and iPad, the company has increasingly diversified its revenue streams away from products.
Services like Apple Music, iCloud storage, the App Store, and Apple TV+ now provide a substantial and growing income source.
For context, in FY2023, iPhones made up the bulk of total revenue at 52.3%.
Services, on the other hand, contributed 22.2% of its total revenue and is growing faster too.
Between FY2015 and FY2023, Services revenue was rose from less than US$20 billion to US$85 billion, implying an impressive growth rate of almost 20% per annum.
Over the same period, product revenue only managed 3.2% per year.
As a cherry on top, the Services division also sports significantly higher gross margins compared to its Products division.
For FY2023, Services had a gross margin of 70.8% against just 36.5% for Products.
History of innovation and growth
For many in the tech world, Apple is synonymous with innovation.
From its humble beginnings in a garage, the iPhone maker has consistently pushed boundaries.
This appetite for innovation fuels its potential for future growth.
For instance, Apple is currently venturing into new areas such as Augmented Reality (AR) through the launch of Vision Pro.
Investors in Apple can be reasonably confident that the company can stay ahead of the competition so long as it continues to innovate.
Get Smart: A safe growth stock
Apple has established itself as a technology behemoth that has not only invented a new category of product (i.e. the iPhone), but also improved on its existing products such as the iMac and iPad.
The business’s financials are also rock-solid with the company churning out a free cash flow of US$37.5 billion for the first quarter of fiscal 2024, 24% higher than the US$30.2 billion generated a year ago.
If you are looking for a growth stock to kick-start your first investment, Apple may be a good place to start.
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