Apple (AAPL) stock went into a funk after hitting an all-time closing high in the middle of December, but it's hard to feel too bad for long-term shareholders. AAPL was still up more than 40% over the past year in early January.
Besides, it's still by far one of the best stocks of all time.
A disappointing fiscal third-quarter earnings report sparked a mid-summer selloff in Apple stock, as market participants fretted over the iPhone maker's third consecutive year-over-year drop in quarterly revenue. Apple beat Wall Street's earnings and revenue forecasts for its fiscal fourth quarter too, but overall sales declined for a fourth quarter in a row.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Shares in Apple rallied hard into the end of 2023 along with the other Magnificent 7 stocks, but a couple of analyst downgrades to Apple stock the first week of 2024 sparked another round of weakness.
Bulls say you should buy the dip in Apple stock, which has put the company's market capitalization back below $3 trillion. And while the latest stumble is certainly no fun for anyone who came to the Apple party late, as noted above, it's tough to have much pity for truly long-time shareholders. After all, they've enjoyed pretty much incomparable returns over the past few decades.
From January 1990 through December 2020, AAPL stock created $2.67 trillion in shareholder wealth, or an annualized dollar weighted return of 23.5%, according to an analysis by Hendrik Bessembinder, a finance professor at the W.P. Carey School of Business at Arizona State University.
Indeed, per Bessembinder's findings, which account for a stock's increase in market value adjusted for cash flows in and out of the business and other adjustments, Apple was the best stock in the world over those 30 years.
True, AAPL stock traded sideways for the first few years of the 21st century, but an explosion of innovation soon put an end to that. Under the visionary leadership of the late Steve Jobs, Apple essentially reinvented itself for the mobile age, launching revolutionary gadgets such as the iPod, MacBook and iPad.
But what really set Apple on its course to becoming the world's largest publicly traded company – and one of hedge funds' favorite blue chip stocks — was the 2007 debut of the iPhone.
Today, Apple isn't just a purveyor of gadgets; it sells an entire ecosystem of personal consumer electronics and related services. And it's a sticky ecosystem at that.
No less an eminence than Warren Buffett has called the iPhone maker Berkshire Hathaway's (BRK.B) "third business," noting Apple fans' fantastic brand loyalty as one reason for being all-in on the stock. (Apple accounts for almost 39% of the value of the Berkshire Hathaway equity portfolio.)
No wonder the iconic tech firm was tapped to become one of the elite 30 Dow Jones stocks. In 2015, Apple replaced AT&T (T) in the Dow Jones Industrial Average.
The bottom line on Apple stock?
(Image credit: YCharts)
Over the past 20 years Apple stock generated an annualized total return (price change plus dividends) of 37%. By comparison, the S&P 500 delivered an annualized total return of 9.6% over the same span.
What does that look like on a brokerage statement? Check out the above chart and you'll see that if you invested $1,000 in Apple stock 20 years ago, it would today be worth almost $530,000. The same $1,000 invested in the would have theoretically turned into $6,186 over the same period.
For those wondering if Apple stock is a buy at current levels, Wall Street mostly thinks so. Of the 45 analysts covering AAPL surveyed by S&P Global Market Intelligence, 20 rate it at Strong Buy, seven say Buy, 14 have it at Hold, three say it's a Sell and one calls it a Strong Sell. That works out to a consensus recommendation of Buy, with mixed conviction.
More Stocks of the Past 20 Years
- If You'd Put $1,000 Into Disney Stock 20 Years Ago, Here's What You'd Have Today
- If You'd Put $1,000 Into Intel Stock 20 Years Ago, Here's What You'd Have Today
- If You'd Put $1,000 Into IBM Stock 20 Years Ago, Here's What You'd Have Today
- If You'd Put $1,000 Into Amazon Stock 20 Years Ago, Here's What You'd Have Today
- If You'd Put $1,000 Into Nvidia Stock 20 Years Ago, Here's What You'd Have Today
- If You'd Put $1,000 Into Netflix Stock 20 Years Ago, Here's What You'd Have Today
- If You'd Put $1,000 Into Microsoft Stock 20 Years Ago, Here's What You'd Have Today
- If You'd Put $1,000 Into Adobe Stock 20 Years Ago, Here's What You'd Have Today
