Apple

AAPL

is a stellar company that is a staple in most investors’ portfolios. A mega-cap giant, the company is known for providing investors with serious gains with minimal drawdowns along the way.

Year-to-date, Apple shares have displayed a high blend of valuable defense compared to a few other tech leaders such as Microsoft

MSFT

and Alphabet

GOOGL

. Additionally, the company has nearly traded in line with the S&P 500, further displaying how sturdy shares have been during a gloomy 2022.

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Stretching out the time frame to over the past year, we continue to see just how robust the company’s shares have been. Apple outperforms GOOGL, MSFT, and the S&P 500 – all by wide margins. I believe that this performance proves just how highly investors think of the company.

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The tech giant released its quarterly results after the bell rang yesterday, and the market hasn’t reacted very well; shares closed down around 3.6% on the day. Surging energy prices, microchip shortages, COVID-19 lockdowns in China, and supply-chain bottlenecks have all been headaches that Apple has faced throughout 2022. Apple opted not to provide guidance moving forward due to the uncertainty of the pandemic.

Amidst all of the red, I believe that investors have been provided with a stellar opportunity to scoop up shares of one of the most widely-regarded companies in the world. However, it’s vital to scale into any position during a market like this; nobody truly knows where the market is heading next, but we do know that sellers have had the upper hand in the recent term. Let’s look at three reasons why I believe investors should be taking another bite out of Apple.

iPhone Dominance

Nearly every time you see somebody using a mobile device, generally, the first assumption is that it’s an iPhone. In fact, the flagship product has become such a hit that it sometimes feels like there are no other viable options for consumers when searching for an upgrade. Simply put, it’s one of the most widely used devices globally.

Of course, they have other exciting devices, including the iPad, Mac computers, AirPods, and the Apple Watch, that have all taken the world by storm. However, the iPhone is the company’s bread and butter.

In yesterday’s quarterly release, Apple raked in $50.6 billion in iPhone sales, a new quarterly record that displayed a 5.5% growth from the year-ago quarter. Additionally, iPhone revenue surged 40% year-over-year from 2020 to 2021.

In Q1 2022, Apple released its newest model of the device, the iPhone 13, which comes with highly sought-after 5G connectivity. Apple says that demand has been robust for the product, which bodes well for the upcoming annual release of the new iPhone (coming in the color green for the first time).

To me, it seems very unlikely that anybody will dethrone the legendary device; Apple has too much of a grip on consumers with its cutting-edge features that people continuously seek. Furthermore, mobile devices have established themselves as essentially a must-have for anybody in the world looking to connect with others, so the mobile device market isn’t going anywhere.

M1 Ultra Microchip

In early March of this year, Apple unveiled its M1 Ultra microchip, the world’s most powerful chip for a personal computer. The chip is expected to rival Nvidia’s

NVDA

flagship RTX 3090 graphics card and Advanced Micro Device’s

AMD

Ryzen Threadripper 3990X processor. This announcement made waves in the industry and reminded the world that Apple can and will compete with the big dogs in almost any arena.

It was a massive leap for the company; the M1 Ultra has UltraFusion – Apple’s new packaging architecture that uses and interconnects the die of two M1 Max chips to create a system on a chip (referred to as SoC) that has insane levels of performance and capabilities. Additionally, it delivers stellar computing power to the new Mac Studio while having the ability to maintain industry-leading performance per watt.

Consumers will have the choice of an M1 Ultra microchip when purchasing Mac Studio. This completely new Mac desktop packs ridiculous performance and enhanced connectivity into a compact form, with the ability to transform any space into a studio.

It’s worth noting that the semiconductor shortage will play spoilsport here and across all of Apple’s products, for that matter. Looking at the bright side, analysts forecast the shortage subsiding late into 2022 and continue unwinding throughout 2023. Mac sales tallied $10.4 billion in its quarter reported yesterday, and overall, Mac revenue surged 23% year-over-year from 2020 to 2021. The new M1 ultra will undoubtedly be a highly sought-after chip, fueling growth in this segment even further.

Shareholder Friendly & Decreasing Forward P/E

The volatility-packed market we’ve undergone throughout 2022 has caused Apple’s forward-earnings multiple to slide down into an attractive spot relative to the value in the past. Additionally, Apple is historically a very shareholder-friendly company.

AAPL’s current forward earnings multiple sits at 26.5X, nearly half of its 2020 high of 41.5X and notably lower than the 2022 high of 31.2X. Over the last five years, the median 19.1X, causing the current value to represent a premium.

Apple has an annual dividend yield of 0.54%, with a very manageable payout ratio sitting at 15% of earnings. The tech giant has increased its dividend five times over the last five years, providing a five-year annualized dividend growth rate of a solid 7.8%. Investors love dividends, and this only gets better whenever companies with this strength continuously increase the dividend with a stable payout ratio.

In yesterday’s earnings release, Apple’s board declared a cash dividend of $0.23 per share, a 5% increase. Additionally, the board also authorized an increase of $90 billion to the existing share repurchase program – a very shareholder-friendly move.

Bottom Line

Apple checks all of the boxes for me – robust product demand, continuous innovation, an established market stance with a tight grip, and the company’s shareholder-friendly nature. It’s challenging to paint a picture of where Apple heads in the short term due to existing supply-chain issues and the microchip shortage, but analysts see this as short-term noise that will soon dissipate. Apple is a leader in the market and should be for a long time.

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