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The investment thesis was written.

Apple designs, manufactures, and distributes a wide range of products and services. Apple has been one of the most valuable companies in the world for a long time and has a lot of leadership positions. Apple’s installed device base is pushing service revenue upwards at a rapid pace, and the company’s profit margin is improving. Apple is moving to become self-sufficient to reduce costs and mitigate disruptions, and the effort has been paying off. The current volatility in the tech sector is presenting a huge opportunity to grab Apple shares at a discount, because I expect Apple to continue its success.

Apple’s high margin businesses are growing at a rapid pace, which is contributing to great revenue growth and margin expansion.
With an increasing subscription base and new product releases, the revenue growth trajectory is solid.
Apple’s stock is being sold at its pre-pandemic level because of the market volatility and tech sector sell-off. There is a great opportunity present.

Growing in right groups.

The results of Apple’s most recent earnings show that the company is focusing on the correct segments for growth and profitability. They generated a whopping $28 B operating cash flow, as revenue grew 9% and they generated $97.3 B. Their services segment led the charge.

Apple is working on becoming self-sufficient in manufacturing. Apple made their own computer chips after severing their ties with Intel. The effort has been successful. Mac sales have been very strong and the Apple M1 has been performing very well against other chips on the market. The profit margins on Mac products were boosted by the fact that they produced their own chips.

It is good news for investors that the Apple Services segment has performed well. The services segment has a higher gross margin than the products segment, and it has a higher growth potential from cloud and digital content. AppleCare has great potential for increasing revenue because of its huge installed device base. There are good days ahead, as shown by the strong performance from Mac and Services.

SEC Filings’ performance by segments

The gross margins of Apple are reported in the SEC Filings.

Revenue growth can be strong.

In the past several years, Apple has been growing at a 10% per year pace, and the revenue growth has accelerated. Multiple factors are responsible for the acceleration. There is no sign that this trend of strong performance from new products will end. The last quarter saw the release of the iPad Air with M1 chip, all-new Mac Studio, and all-new Apple Studio display.

The number of active device bases is expected to grow with the release of new products. The active base has been growing at a rate of about 150 million per year. Revenue growth from AppleCare, advertising, and cloud services will be increased due to this larger installed base. The number of Apple subscribers to these services is 785 M.

YCharts has data.

There is a favorable valuation thanks to the volatility.

Supply chain disruption, inflation, war, and Federal Reserve’s changing policies dragged down the tech sector. The index fell from 16,000 to 12,000. Apple stock is trading below its pre-pandemic P/E ratio of 25.5x. There is a chance for investors to grab Apple shares at a bargain.

The index is called the CNBC.

Intrinsic value is an estimation.

I used a model to estimate Apple’s value. I used currentEBITDA as a proxy for cash flow and WACC of 9.0% as the discount rate for the estimation. For the base case, I assumed 20% growth for the next 5 years and zero terminal growth. I assumed 22% and 24% for the next 5 years and zero growth afterwards for the bullish and very bullish case.

The current stock price presents a 20-30% upside. I expect them to achieve this upside because of their technological superiority, organic growth, and market dominance.

The price target has been set.

There was an upside.

The base case is about something.

$170.23 is what it was.

Only 16% of people.

Bullish case.

$182.94

22%

The case is very bullish.

$196.41 is the price.

34% of people

The data and assumptions used for the price target estimation are summarized.

9.0% is the WACC.
The growth rate was 20%, 22%, and 24%.
$130 B is the current earnings.
The stock price was $147.11 on May 14.
A tax rate of 20%.

The stock rating was for Cappuccino.

In this article, the details of the metric are explained.

The person is weighting

AAPL is a stock.

Moat strength is an economic strength.

30% to 40%.

There were 5.

Financial strength is a strength.

30% of the population

There are 4

The growth rate is different to the sector.

15% of the population.

There were 3

The safety margin is small.

15% is the average.

There were 5.

There is a sector outlook.

10% or more.

It was 4

Overall, it was a good overall.

There is a 4.3.

The economic Moat Strength is 5/5.

Apple gets 5 out of 5 Apple has an exceptional competitive edge. They have a competitive edge due to technological superiority, switch costs, and network effects.

Financial strength is graded on a 5 point scale.

Apple has $51.5 billion in cash and a high covered ratio of 45.13x, but their current ratio of 0.93x and quick ratio of 0.76x is in line with the sector

The growth rate was 3.

Apple is growing at a consistent pace. Apple had an annual revenue growth rate of 18.63%. These revenue growth numbers are great because of their leadership position and strong revenue. It is difficult to give out 4 or 5 stars for companies in the start-up or ramping-up phase.

The Margin of Safety is graded on a 5 point scale.

At this point, Apple is trading 25% under its true value. There is an opportunity to grab Apple’s shares under their intrinsic value. It doesn’t make sense that their P/E ratio is below pre-pandemic levels.

The outlook for the sector for the next few days.

The tech sector will keep on growing at a rapid pace with new technology and markets, but the smartphone and laptop segments won’t be the fastest growing segment in tech Growth will be adequate, but not exceptional.

There’s risk.

Competition within the smartphone market is only getting more complex, as Apple’s main segment is still the iPhone. Camera quality, computing/memory performance, weight/size, and other features are preferred by consumers. I don’t think Apple will struggle because they still command a leadership position based on technological superiority, switching cost, and brand image. I don’t expect a lot of growth from the iPhone segment in the future.

The global market share of smartphones.

Apple has been moving towards self-sufficiency by manufacturing their own parts. The effort has impacted the business in a positive way by improving margins. It can result in isolation, lower technological development, and less market penetration if they rely on their own parts. The cellphone makers in Japan are Panasonic, Sharp, and NEC. They were ahead of the game in terms of innovation, but didn’t achieve global success. I don’t think this will be a problem for Apple, because this is an extreme case. As Apple transitions towards being more self-sufficient, investors should keep an eye on whether the company is maintaining its cutting-edge technology.

Conclusion of work.

Apple has been a great investment for a long time now. New products and services will keep their growth engine running, because of their technological superiority, brand image, and switch cost. I expect Apple to do well in the foreseeable future because of their strong financials and market leading position. 20-30% upside is what I think.