How To Buy Its Shares – Forbes Advisor UK

Shares in iPhone, iPad and Mac manufacturer Apple fell 2% from $163.64 (£129.87) to $159.98 (£126.97) in after-hours trading yesterday (Thursday) despite the firm announcing record second-quarter revenues. 

The company’s reported earnings per share of $1.52 (£1.21) comfortably surpassed the analysts’ consensus estimate of $1.43 (£1.13), according to market data provider Refinitiv.

Apple’s second-quarter revenues of $97.3 (£77.2) billion also exceeded the Refinitiv consensus estimate of $93.9 (£74.5) billion. 

Overall revenue growth of 9% was driven by new quarterly sales records in the Americas, Europe and Greater China, although this was the first time in the last six quarters that revenue growth failed to hit double digits.

Apple’s services division, comprising subscriptions, licensing fees and warranties, delivered revenue growth of 17%, driven by all-time sales records for the App Store, music and cloud services. Apple also achieved a 15% year-on-year increase in revenue from Mac, helped by the transition from Intel processors to the faster and more powerful M1 chips.

iPhone revenue grew by a more modest 5% year-on-year, partly due to the earlier launch of the new iPhones in 2021 and supply constraints. However, the iPhone 13 has performed strongly, supported by the launch of the new iPhone SE. 

Tim Cook, Apple CEO, pointed to the contribution to revenue from ‘switchers’ – customers moving from an Android phone to an iPhone.

However, there was less positive news for iPad sales, which fell by 2%, although Apple expects the upgraded iPad Air to drive revenue in the current quarter. Mr Cook referenced the “very significant supply constraints” due to the Covid-related shutdowns at factories in China and the war in Ukraine. 

Apple generated over $28 (£22) billion in operating cash flow and announced a 5% increase in its dividend. Having spent $86 (£68) billion on share buybacks in 2021, the board has authorised a further $90 (£71) billion on share repurchases.

But Apple warned of headwinds ahead due to current supply constraints which it estimates could reduce current quarter revenue by $4 to $8 billion. Apple also faces an increasingly challenging macroeconomic environment which could take its toll on the demand for high-end smartphones and computers. 

Overall, Apple shares have fallen 13% since their high of $182.94 (£145.19) at the end of 2021. However, its share price has been relatively immune to the heavy share price falls of other US growth stocks such as Meta and Tesla. It remains to be seen whether high inflation and supply chain issues will impact sales during the rest of 2022.

Here’s what you need to know about buying and selling Apple shares.

Note: investing in shares comes with no guarantees. When buying company shares, it’s possible to lose some, or even all, of your money.

That said, over the long term – a minimum of five years (preferably longer) – it’s possible for share-based investments to produce superior returns to those available from low interest-paying deposit accounts, especially once inflation has been factored in.

Why own stocks?

It’s worth asking yourself why you want to buy shares. Are you looking for capital growth, income from dividends or a combination of both? Your investment objectives will determine what type of shares you invest in, whether high-growth technology shares or more defensive companies with a reliable dividend stream.

Most investors look for sound fundamentals, including a track record of consistent earnings growth, a strong market position or products or services with future growth potential. These should provide a solid platform for future share price growth.

That said, other factors such as takeover rumours can drive up a company’s share price. Investors may also be attracted by recovery plays, with a depressed share price providing the potential for a rebound.

How to buy stock

Once you’ve decided which company to invest in, there are several steps to buying shares.

1) Open an account

Whether you’re a seasoned share trader, or new to stock market-based investments, you’ll need to open an account with a regulated brokerage to buy shares in Apple.

Stockbroking is a competitive market place and services for DIY investors come in a range of guises – from online investing platforms run by some of the biggest names in financial services, to investment trading apps that work off your smartphone or tablet.

Before opening an account, bear in mind the following:

• Keep your ultimate financial goals in mind
• Be prepared to ride out stock market ups and downs
• Aim to keep trading costs to a minimum
• Remember that share investing can prompt tax charges, for example, when selling part of your portfolio, unless you use a tax-efficient wrapper such as an ISA

And before buying any shares, it’s worth asking yourself these questions:

• Should I take financial advice?
• Am I comfortable with the level of risk in question?
• What’s my investing budget?
• Can I afford to lose money?
• Do I understand the company in which I’m looking to invest?
• Am I protected if my platform provider/adviser goes out of business?

2) Where is Apple traded?

The ticker symbol for Apple Inc is AAPL. It is listed on the technology-focused Nasdaq exchange in the US, which is open for trading from 9.30am to 4pm (Eastern Time). You should be able to buy US shares through most brokerage accounts.

3) Do your research

To find out more about Apple, visit the company’s online investor relations page. 

It’s also worth comparing Apple’s valuation to other comparable US technology companies. One way of doing this is to look at the relative price-earnings ratios – shares trading on a high price-earnings ratio have high expectations of substantial future growth. 

Another useful research tool is brokers’ 12-month share price forecasts, which are available on financial websites. There are currently nearly 40 brokers following Apple shares, and their price forecasts give an indication of the upside and downside potential of the Apple share price over the next year.

4) What’s your investing strategy?

People tend to invest in one of two ways: either with a lump sum purchase, or via smaller, steadier amounts over time.

The latter method is often referred to as a means of ‘pound cost averaging’, a stock market hack which helps you pay less per share on average over time in falling stock markets. Rather than waiting to build up a lump sum, it means an investor’s money can be put to use in the market straightaway. However, drip-feeding your investment may sacrifice capital growth if the share price is rising and you will also pay more in share-trading fees.

5) Place an order

Once you’re ready to buy shares in Apple, log in to your investing account or trading app. Type in Apple’s ticker symbol (AAPL) and the number of shares you want to buy or the amount of money you’re prepared to invest.

Many brokerages also allow you to add a ‘stop loss’ once you have bought the shares, which allows you to limit your losses if the share price falls. For example, if you buy shares at £10, and set a stop loss of £9, your shares would be sold if the share price falls below £9, limiting your potential loss to 10%.

6) Review Apple’s performance

Whether your share portfolio is crammed full of companies or holds only a handful of stocks, it’s vital you review how each component is performing on a regular basis: monthly, quarterly, or annually.

Doing this gives you the opportunity to review performance and ask if any adjustments to your holdings are required – to maintain the status quo, buy more stock, or sell existing shares.

How to sell stock

At some point, you will want to sell your holdings. To do so, log in to your investing platform, type in the ticker symbol (AAPL) and select the number of shares you want to sell.

Note that if you’ve made a substantial profit, you may be liable to pay Capital Gains Tax (CGT) when you come to sell your holdings, especially if your shares were held outside of a tax-exempt wrapper such as an Individual Savings Account or a Self-Invested Personal Pension.

The CGT tax-free allowance for the tax year 2022-23 is £12,300. Find out more here about CGT rates and allowances. 

How to invest in Apple via a fund

Investing directly in individual stocks can be an absorbing and, hopefully, profitable experience. It may also qualify you for shareholder perks specific to the company in question.

Investing directly in individual companies can, however, leave you vulnerable to stock market volatility and unforeseen swings in share prices. 

That’s why financial experts recommend that most people invest in a diversified mix of asset classes and funds that hold a ready-made portfolio of upwards of fifty different company shares.

Being a major component of the Nasdaq index, Apple is found in many global and specialist technology funds and investment trusts, as well as tracker-style Exchange Traded Funds.