If you bought $1,000 of Apple (NASDAQ:AAPL) in 2012, your AAPL stock would be worth $9,298, a compound annual growth rate of 25%.
Source: Vytautas Kielaitis / Shutterstock.com
If you buy $1,000 of Apple today and let your gains over the past decade ride, you can be confident it will be worth a lot in 2032.
Apple’s Record Quarter and AAPL Stock
Apple reported its Q1 2022 results at the end of January. Revenues grew 11% to $123.9 billion, an all-time record.
“The very strong customer response to our recent launch of new products and services drove double-digit growth in revenue and earnings, and helped set an all-time high for our installed base of active devices,” said Luca Maestri, Apple’s CFO. “These record operating results allowed us to return nearly $27 billion to our shareholders during the quarter, as we maintain our target of reaching a net cash neutral position over time.”
There’s a treasure trove of information from the CFO’s comments and my opening sentence about Apple’s sales.
- The 7 Best Web 3.0 Stocks to Buy for March 2022
First, its goal of becoming net cash neutral means shareholders can expect more dividends and share repurchases in the years ahead. The actual meaning is that it will hold equal amounts of cash and debt. As of the end of December, it had $202.6 billion in cash, cash equivalents, and marketable securities and $123 billion in total debt for a net cash position of $80 billion. That’s down from $163 million at the end of December 2017.
In four years, it’s gotten halfway to its long-term goal.
Here’s what Maestri had to say about share repurchases and dividends during the Q1 2022 conference call:
Our business continues to generate very strong cash flow, and we’re also able to return nearly $27 billion to shareholders during the December quarter. This included $3.7 billion in dividends and equivalents and $14.4 billion through open market repurchases of 93 million Apple shares. We also began $6 billion accelerated share repurchase program in November, resulting in the initial delivery and retirement of 30 million shares.
So, it paid an average of $154.84 per share, buying back its stock in the three months between October and December. That’s a good, if not great, average price paid. We’ll see in future reports how its accelerated share repurchase program turns out.
As for the record results in the quarter, the word is mentioned 43 times in the Q1 2022 conference call with analysts. That’s 13 more times than “revenue.”
It was a good quarter indeed.
The only two blemishes were a 14% decline in iPad sales and a 14% drop in sales in Japan.
As always, while Tim Cook and the rest of the Apple management team are working on the next big thing beyond the iPhone, the rest of the company are working on making the existing products better and more desirable for consumers.
In the fall, it plans to launch more than a dozen new hardware products, including three versions of the iPhone 14, an enhanced version of the MacBook Air with a second-generation M2 system-on-chip set, several Mac desktops, and a new iPad Pro, to name a few.
Farther out, one of the big possibilities is the long-awaited Apple car. Bloomberg suggests the company is looking to produce autonomous driving electric vehicles by 2025. However, others are offering a more realistic timeframe is 2028.
The later, the better, if I’m a shareholder, because EVs will be more in demand in 2028 than in 2027 and 2026, and so on. So later likely means an easier sell.
Other than the Apple car, augmented reality and virtual reality headsets are said to be in the works, and touchscreen laptops, health care, and even manufacturing its products in its own facilities right in America.
I’m not a tech nerd, but all of these will take plenty of capital to develop. Fortunately, Apple’s got lots.
The future remains bright.
The Bottom Line
While it’s hard to imagine AAPL stock compounding by 25% over the next decade as it did in the past one, I don’t think it would be out of the question to deliver an annual return in the high teens.
Assuming 18% compound annual growth over the next decade, your $10,298 investment in Apple would be worth $53,898. Over 20 years, your $2,000 investment would generate a 17.9% annual return.
I’d take that every day of the week and twice on Sundays.
Will it happen? Warren Buffett thinks so. Berkshire Hathaway’s (NYSE:BRK.A, NYSE:BRK.B) Apple stake accounts for 43.7% of the company’s $333 billion investment portfolio. The next highest is Bank of America (NYSE:BAC) at 13.9%, about one-third the size.
As Apple goes, so goes Berkshire. That’s an excellent thing for the shareholders of both companies.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.
More From InvestorPlace
- Stock Prodigy Who Found NIO at $2… Says Buy THIS Now
- Man Who Called Black Monday: “Prepare Now.”
- Get in Now on Tiny $3 ‘Forever Battery’ Stock
The post What Will Apple Stock Be Worth in 10 Years? A Lot!Â appeared first on InvestorPlace.