Today, Apple Inc. (AAPL) reached a major milestone, making its trading debut on the Dow Jones Industrial Average. It replaces AT&T, Inc. (T). While it may be the company’s first day trading on the prestigious Dow, it has already claimed a spot in the top five of the 30 stocks in the index.
The other four stocks comprising the top five include Goldman Sachs (GS), IBM (IBM), 3M (MMM) and Boeing (BA); so it is in good company.
You could say that Apple has come a long way from its humble beginnings in Steve Job’s parent’s garage. And Apple shares have also come quite a ways in 2015 alone.
Apple has had a shaky start to 2015. Lower-than-expected retail sales in the final months of 2014 had investors wary of retail stocks, even Apple–and as a result, shares traded in a herky jerky manner in January. But Apple has quickly earned the title of the “comeback” stock, and there’s a good reason why…
In the first quarter, Apple’s net sales increased nearly 30% to $74.60 billion from last year, while earnings jumped 38% to $18 billion, or $3.06 per share. This beat analysts’ estimates of $2.60 EPS on revenues of $67.69 billion. So following the report, shares surged 9% in two days and haven’t looked back, rising 18% since the end of January.
The next earnings date is tentatively scheduled for April 22, 2015, and I can hardly wait. In the second quarter, Apple expects revenues between $52 billion and $55 billion. Analysts are looking for 27% annual earnings growth and 21% annual sales growth, and they’ve revised their earnings estimates 6% higher in the past three months, which bodes well for another earnings surprise.
Apple also recently increased its stock buyback program to a whopping $90 billion. In the last quarter alone, Apple bought back $8 billion of its stock. Between dividend payments and share repurchases, Apple expects to return $130 billion to shareholders by the end of 2015. This is a major reason why I chose Apple as my best stock pick for 2015, and I’m so glad I did. AAPL shares are now up 16% from my recommended buy price.
This Conservative stock also continues to earn top marks in Portfolio Grader. Since last March, AAPL has remained in buy territory. And it’s not surprising, considering that AAPL has been successful in turning around its balance sheet and attracting more institutional buying pressure.
AAPL currently receives an A for its Quantitative Grade, placing the stock firmly in Strong Buy territory. Meanwhile, the stock earns a B for its Fundamental Grade, thanks to strong sales growth (A), earnings growth (B), earnings momentum (B), earnings surprises (B), cash flow (B), analyst earnings revisions (A) and return on equity (A). For the moment, the company could improve operating margin growth (C), but I expect these grades will firm up with the next quarterly report.
So, given that AAPL shares have dipped slightly today with the overall market, this is the perfect opportunity to buy shares of a stock with a proven record of bouncing back.
For more stock grades, please visit my Portfolio Grader website!