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Apple ETFs at Record High: Further Potential on iPhone Optimism

Published 07/15/2021, 01:00 AM
Updated 07/09/2023, 06:31 AM
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The Apple AAPL stock should taste sweeter ahead. Apple is reportedly asking suppliers to boost the production of its next-generation iPhones by 20%, according to a Bloomberg News report published late Tuesday, as quoted on CNBC. The intended ramp-up in production from 2020 numbers comes despite the fact that millions upgraded their phones to new 5G models.

5G could be a boom time for Apple as many will upgrade their phones while carriers expand their coverage of the new faster networks around the world.Apple has maintained a production level of about 75 million devices from the product’s launch through the end of that year, Bloomberg reported, as quoted on CNBC. Now, the company reportedly intends to push the number higher to as many as 90 million.

Credit Suisse (SIX:CSGN) expects iPhone sales of 234 million units this year, 237 million units in 2022 and 249 million units in 2023. Though Apple no longer reports iPhone unit sales, it declared $47.94 billion in iPhone revenue in its fiscal Q2 earnings, up 65.5% year over year, the same CNBC article noted.

If this was not enough, a few weeks back, Wedbush analyst Dan Ives said Apple could touch a $3 trillion market capitalization in 2022, as quoted on CNBC. Apple has a market cap of over $2.48 trillion, currently. It topped the $1 trillion mark in 2018 and the $2 trillion threshold in 2020.

The company is benefiting from continued momentum in the Services segment, driven by strong App Store sales and robust adoption of Apple Music and Apple Pay. Non-iPhone devices, particularly Apple Watch and AirPod, are the other notable drivers for the long haul.

Apple’s focus on autonomous vehicles and augmented reality/virtual reality technologies presents growth opportunity for the long term. Apple has been transforming itself from a basic hardware company to a software services company.

What Do Indicators Say About Apple’s Value Status?

Going by valuation metrics, forward P/E of AAPL is 28.1 times versus the industry score of 24.4 times. Though these measures point to higher valuation of Apple than the industry, a higher P/E is always not a sign of worry. It shows investors’ confidence in a particular stock among the bunch.

Investors should note that return-on-equity of Apple is 111.8%, higher than the industry average of 97.4%. Plus, both return-on-assets and return-on-capital of Apple are higher than the industry measures. The estimated 3–5-year EPS growth of Apple is now 12.7% versus 11.8% of the industry measure.

Investors should note that the AAPL stock has a Zacks Rank #2 (Buy). It has a Growth Score of B at the time of writing. To tap the optimism, investors can play Apple-heavy ETFs as the basket approach reduces company-specific risks.

ETFs in Focus

Below we highlight a few ETFs with heavy exposure to Apple for investors seeking to bet on the stock with much lower risk.

iShares Dow Jones US Technology ETF IYW – APPL takes the second spot with 17.72% weight. The fund has a Zacks Rank #2 (Buy).

Select Sector SPDR Technology ETF XLK – APPL holds the top spot with 21.13% weight. The fund has a Zacks Rank #2.

Vanguard Information Technology ETF VGT – APPL occupies the first location with 20.13% weight. The fund has a Zacks Rank #2.

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Apple Inc. (NASDAQ:AAPL): Free Stock Analysis Report

Technology Select Sector SPDR ETF (NYSE:XLK): ETF Research Reports

iShares U.S. Technology ETF (IYW): ETF Research Reports

Vanguard Information Technology ETF (VGT): ETF Research Reports

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