While many of its technology peers have suffered substantial falls in share price over the last six months, Apple has continued to buck the trend.
Although the US technology giant’s share price fell by 25% from March to June, it has since recovered to trade at $160 (£136), only 14% below its year-high of $183 (£156).
Apple recently announced record quarterly revenue, thanks to strong iPhone sales, along with a $28 (£24) billion return of cash to shareholders. It’s also delivered an annual return of 21% to shareholders over the last 10 years, according to Morningstar.
The company is unusual amongst US growth stocks in paying a dividend, with a current dividend yield (dividend divided by the current share price) of 0.6%.
Record third quarter revenue
Apple achieved record quarterly revenues of $83 (£71) billion in its third quarter (ending in June 2022). The 2% year-on-year increase was driven by continued strong sales of iPhones, despite supply issues in China.
The company also delivered record revenues in each of its services categories, including music, cloud services, Apple care and payment services. However, sales of wearable technology (such as Apple watches), iPads and Mac computers slowed due to the general global economic malaise.
Net profit however, fell from $21.7 (£18.5) billion in Q3 2021 to $19.4 (£16.6) billion. Apple pointed to adverse foreign exchange movements, weakness in digital advertising and loss of revenue due to the war in Ukraine as contributing factors to the decrease in profit.
Luca Maestri, Apple’s chief financial officer, commented: “Our results continued to demonstrate our ability to manage our business effectively despite the challenging operating environment.”
He added that Apple, “generated nearly $23 billion in operating cash flow, returned over $28 billion to our shareholders, and continued to invest in our long-term growth plans.”
Outlook for Apple shares
Looking forward Apple is likely to face similar headwinds to its peers, with high inflation and rising interest rates squeezing advertising budgets. It will also continue to face stiff competition for social media users from the likes of YouTube, TikTok and Snapchat.
While the cost of living squeeze may lengthen phone upgrade cycles, Apple benefits from high customer loyalty, particularly for iPhones. Overall, Apple is forecasting continued revenue growth, although the growth rate is expected to decelerate in its services division.
According to WSJ Markets, the analysts’ 12-month share price forecasts range from $136 to $220. This suggests potential upside from the current share price of $159.
Let’s take a closer look at what you need to know about buying and selling Apple shares.
Investing in share-based investments can be a good way to produce higher returns than cash-based investments. However, your capital is at risk, your investment can go down as well as up, and you may not get your money back. If you are unsure as to the right investment, you should seek financial advice.
How to buy Apple shares
Before you decide to open an account, you should set your investment goals, including the amount you wish to invest, the length of time you plan to invest for, whether you are comfortable with the risks involved and whether you can afford to lose some, or all, of the money.
If you are looking to buy Apple shares, the following steps will guide you through the process:
1. Open a trading account
Whether you’re an experienced share trader, or a beginner, you’ll need to open an account with a trading platform.
It’s worth taking the time to review the costs involved - most, but not all, platforms charge a share trading fee and some may also charge an annual platform fee for holding shares.
There are a variety of trading platforms available, from online DIY platforms such as Hargreaves Lansdown, AJ Bell and interactive investor, to app-based platforms such as eToro and Trading212.
2. Where is Apple traded?
The ticker symbol for Apple Inc is AAPL. Apple is traded on the technology-focused Nasdaq exchange in the US which is open for trading from 9.30am to 4pm (Eastern time) from Monday to Friday.
Most trading platforms allow you to purchase US shares. You will be charged a foreign exchange fee (typically around 1%, but may range from 0.15% to 1.5% depending on your platform). Many platforms also charge a slightly higher trading fee for buying US shares.
If you plan to trade US shares regularly, it’s worth looking at the best trading platforms as their fees can vary significantly. A small number of trading platforms, such as IG, allow you to hold your account in US dollars which may reduce the foreign exchange you have to pay.
You will be requested to complete a W-8BEN form which allows you to benefit from a reduction in withholding tax from 30% to 15% for qualifying US dividends and interest.
You will also have a foreign exchange exposure if you hold US shares. If the pound weakens against the dollar, your shares will be worth more in pounds sterling (and vice versa).
As with UK shares, any profit on US shares will be subject to Capital Gains Tax, subject to your annual allowance (currently £12,300). You will not have to pay Capital Gains Tax if you hold the shares in an Individual Savings Account or Self-Invested Personal Pension.
3. Do your research
To find out more about Apple, visit the company’s investor relations page.
It’s also worth comparing Apple’s valuation to other comparable US technology companies. One way is to look at the relative price-earnings ratios - shares trading on a high price-earnings ratio have high expectations of significant growth in the future.
Another useful research tool is brokers’ 12-month share price forecasts, which are available on financial websites. There are currently over 40 brokers following Apple shares, and their price forecasts give an indication of the upside and downside risk of the Apple share price over the next year.
4. Should you invest on a monthly basis or as a lump sum?
People tend to buy shares either as a lump sum purchase, or drip-feed their investment on a monthly basis over time.
Monthly investing is often referred to as a means of ‘pound cost averaging’, whereby making regular contributions helps to smooth out the highs and lows of the stock market. This provides some protection if the share price falls after you have bought shares, as you will effectively invest at the average share price over the whole period.
However, drip-feeding your investment may sacrifice capital growth if the share price is rising and you may also pay more in share trading fees.
5. Place your order
Once you’re ready to buy shares in Apple, log in to your trading account. Type in the ticker symbol AAPL and the number of shares you want to buy, or the amount of money you want to invest.
Many platforms also allow you to add a ‘stop loss’ after you’ve bought the shares, which allows you to limit your losses if the share price falls. For example, if you buy shares at £100, and set a stop loss of £90, your shares would be sold if the share price falls below £90, limiting your potential loss to 10%.
6. Monitor Apple’s performance
Whether you hold shares in just a few, or many, companies, you should review how your shares are performing on a regular basis.
Monitoring your portfolio allows you to make any necessary adjustments, whether buying additional shares, or selling part of your holding.
How to sell your Apple shares
When you want to sell your Apple shares, log in to your trading platform, type in the ticker symbol (AAPL) and select the number of shares you want to sell.
If you’ve made a profit, you may have to pay Capital Gains Tax (CGT) on the sale of your shares. However, as mentioned earlier, this is not the case for tax-exempt wrappers such as Individual Savings Accounts.
How to invest in Apple indirectly
You may make a profit if you invest in Apple shares, however, holding shares in an individual company is higher risk than investing in a wide range of shares. A diversified portfolio should also reduce volatility.
One option is to invest indirectly in Apple by investing in a fund, investment trust or exchange-traded fund (ETF) that holds Apple shares, amongst others. These products provide a ready-made portfolio of shares in a number of different companies.
There is a wide range of options, including global and US funds and investment trusts, together with ETFs that track the S&P 500 index. However, you will pay an annual management fee for holding these products.