“Apple had a remarkable quarter as it reestablished itself as the preeminent smartphone maker in the world,” Andrew Sebastian writes for The Motley Fool.
“It’s the premium prices Apple commands for its phones that make Apple such a great business and cash generator. The company captures 60% of the profits in the smartphone market through its high-margin strategy with only 40% of the U.S. market and 15% of the world market,” Sebastian writes. “This testifies to Apple’s business model and the affinity for its smartphones in the U.S. and international markets.”
“Apple’s innovative and user-friendly designs will afford the company continued success and loyalty from its die-hard users. Along with its envious financial position, Apple has the ability to wade through any ups or downs and come out on the other side with a hefty amount of cash,” Sebastian writes. “Even after the bump in the stock, Apple still trades at a low P/E multiple of 14 with a dividend yield of 2.3 percent. The company perennially generates returns on equity and capital north of 25% and enormous amounts of free cash flow, as it generated $44.5 billion just last year. In addition, the stock has seen significant insider buying lately with over 200,000 shares acquired by Apple’s board and management in the month of March. Investing along with company insiders is one of the smartest moves an investor can make and an opportunity exists in Apple to do so.”
Read more in the full article here.
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