Despite not having the finest year in 2022, Apple stock still outpaced most of its tech competitors. Can it repeat it this year for the aforementioned five reasons?
We believe that Apple’s (NASDAQ: AAPL) stock has a tremendous upside potential through 2023 and beyond. Jim Suva, a Citi analyst, echoes the same sentiment and offers five explanations for why the stock of the tech company may rise this year. Here is our opinion and if we plan to purchase the shares.
1. Indian power
Workers in China went on strike last month as a result of Covid lockdowns and subpar working conditions. Since China produces the majority of iPhones, several outlets ran out of devices. Management felt compelled to diversify its manufacturing sites as a result of this.
As a result, Apple has chosen India as the location for its upcoming manufacturing facility. Combining this with the fact that the company doesn’t have to pay an import tax when importing iPhones from China, we can understand how such a move might help the price of Apple shares.
2. iPhone sales will rise
Additionally, it is anticipated that Apple stores would appear soon in India. The entire addressable market for the second-largest population in the world is enormous given that over 95% of the population utilizes Android smartphones.
Even though the average family income in Asia is still low, India’s economy is predicted to develop at one of the quickest rates in the coming ten years. Affordability and discretionary spending ought to increase as a result. India might soon witness a repeat of this, based on the history of iPhone sales in China. So, this year, we anticipate both iPhone sales and Apple shares to climb.
3. AR and VR devices
Apple is also anticipated to introduce its own AR/VR goods in addition to iPhones. Although Meta has a reputation for blowing budgets on its Meta Quest, we think Apple’s offering will be less expensive to make.
This is due to the fact that developers were given access to its AR/VR toolkit last year. This enables developers to create the ecosystem before the tech giant pours a lot of money into a work-in-progress. Better apps and a more user-friendly layout will therefore provide customers with more motivation to purchase the goods. After all, Apple stock has a return on capital employed of 56%, which is higher than the majority of its closest tech rivals.
4. Increased service revenue
But in addition to sales of things, the organization also makes money through services. It earns this much money from its app store, music memberships, marketing, etc. After declining for several quarters, services revenue could begin to increase this year as more iPhones are anticipated to be sold.
What’s more, the board keeps facilitating huge returns to shareholders. Suva estimates that Apple may repurchase $110 billion worth of its outstanding shares, or close to 5% of its market capitalization.
Because of these factors, Citi’s managing director of equity research recommends Apple stock as a “buy” with a $175 price objective. We’ll be seeking to acquire the stock shortly because this offers us an opportunity to increase our investment by 30% from the current levels.
Also read: How To Buy Apple Shares