Why Investors Favor Apple Over Its Peers
Maxwell is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Apple's (NASDAQ: AAPL) success story has been that of determination inspiration and ambition. In relatively little time, this stock has enjoyed exponential growth with a massive share of the global market and billions worth of turnover. Over the last two financial years, the stock has considerably widened its competitive moat by introducing new ground-breaking innovative technologies, devising aggressive strategies for greater market expansion, planning a diversified product portfolio and announcing important acquisitions that are expected to reap greater rewards. All these developments have significantly helped the stock in maintaining its positive upward movement.
After the tremendous success of its predecessor, the iPad 2, Apple has recently unveiled the new iPad 3, a state-of-the-art feature-packed tablet powered by the latest iOS that has sent billions of Apple Zealots into frenzy. As a result, Apple is currently riding the high tide after the tremendous reception that the new iPad has received in markets all around the world. Global sales figures for the new iPad have been impressive with more 3 million units sold in just the first two weeks of its release. Apple has also announced plans to launch the new Apple TV, a Full HD 1080P high-resolution TV with iPad-like functionalities. The Apple TV is expected to help Apple further strengthen its market share and increase profit margins. The recent announcement by Apple to initiate a 3-year Stock Buyback Program in September is expected to make the stock an even more attractive investment option by pushing the shares higher while also expanding the investor pool.
Apple has also reached the all-important milestone of reporting a staggering 25 billion downloads on its App Store. Given the immense popularity of the online store, I believe that sales will continue to grow and this will have a positive effect on the stock's revenue margins. With such an impressive financial performance in the current fiscal quarter, I believe that the stock projects a favorable outlook in the near future with impressive gains and greater cash flows. However, there has been no positive development on the antitrust lawsuit that was recently filed by the Justice Department, accusing Apple of price-fixing. This is inarguably the most important legal battle that the company has faced in some time for the fact that its reputation and credibility is at stake. Therefore, although the stock will certainly continue to post a remarkable performance in the coming months, I believe that the final verdict of this legal battle will significantly determine the future course of the stock.
Even when analyzed in terms of capital, Apple is a massive business with a market capitalization of more than $534 billion and a trading volume exceeding 26 million. Apple's price to earnings ratio has been impressive at 16.36, easily exceeding industry standards. A major part of the stock's strong performance in the market in recent fiscal quarters has been the result of a highly impressive dividend history which has, in turn, attracted strong investor sentiment. The stock pays nearly $2.65 in quarterly dividends to investors on earnings per share of $35. These impressive figures automatically make Apple a high-yield stock investment option when judged by industry standards.
To rate Google (NASDAQ: GOOG) as the most formidable rival of Apple would be valid. Google has emerged as a worthy contender in the global smartphone market with the release of the new Android OS, an open source, highly customizable operating platform that makes its contemporaries seem obsolete. As a result, Google has gained a massive share of the global market with a capitalization of nearly $194 billion and average trading volume exceeding 2.5 million. Google has recently made clear its plans to redirect its strategic focus to emerging markets like China. This is a clever move by the tech giant that will certainly encourage higher revenues and greater cash flows while also allowing the company to widen its competitive moat. However, the stock recently announced the issuance of a series of new 'non-voting' stocks which has received mixed sentiment in the market and has disturbed the stock's positive performance to some extent. Google is also locked in a legal battle with Oracle on alleged infringement of patents on Oracle's Java Technology. This had added to the troubles of Google, further disturbing the stock's performance as a result.
Nokia (NYSE: NOK) remains ever-so-committed to recapturing its previous share of the global smartphones market. The company is still as financially strong as before; a market capitalization of nearly $14 billion and trading volume of more than 38 million provide ample proof of that. However, a string of ill-planned investments and poor decisions have impeded the stock from achieving substantial growth and market share. Consequently, the company's recent decision to overhaul its infrastructure has faced greater than expected competitive challenges which have greatly contributed to mounting losses for the first fiscal quarter. Reporting a massive drop of 52% in global smartphone sales just for the first fiscal quarter, the stock has followed a predominantly downward trend in the current financial year. This has only helped in adding to the chagrin of investors who have traditionally placed their loyalty in the stock, prompting them to reconsider their decision to continue with their investments. Hence, I do not see Nokia as a promising stock investment option currently, let alone a competitor that would pose a serious challenge to Apple.
Microsoft (NASDAQ: MSFT) has been the traditional rival of Apple with a market capitalization of $272 billion and trading volume in excess of 46 million. The stock's recent run in the market has been impressive and has helped to attract favorable investor sentiment. Shares of the stock are up by nearly 25% year-to-date and continue to show healthy signs of growth. The impressive gains are predominantly the result of high expectations prior to the unveiling of the new Windows 8 operating system, which is being hailed by many as Microsoft's brightest star in the last few years. However, Apple's performance in the current financial year has been very impressive and echoes with the promise that investors seek in a volatile market. Therefore, I believe that Apple is inarguably a safer and more viable investment option in its specific industry.
StockCroc1 has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.