If $229 billion was the GDP of a country, it would place within the top 50 economies in the world. Instead, it's the amount of revenue Apple (NASDAQ: AAPL) generated -- in just the past year.
Here are some more numbers:
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$48 billion in profit.
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$51 billion in free cash flow.
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$269 billion in cash and investments.
These figures are staggering. And together, they've helped Apple's stock achieve a mind-blowing $900 billion market cap. Yet as hard as it may be to fathom, Apple's shares are still undervalued. In fact, here are three reasons investors may wish to buy the tech titan's stock today.
Now's a great time to take a bite of Apple's stock. Images source: Getty Images.
A strengthening ecosystem
Skeptics say Apple is simply a glorified hardware company -- one whose margins will eventually be eaten away by an onslaught of lower-priced competition. However, I'd argue that Apple is as much a software and services business as it is a hardware company. And it's this aspect of Apple's business that gives it its most powerful edge.
Apple's four major software platforms -- iOS, macOS, watchOS, and tvOS -- provide seamless experiences across all Apple devices. For example, you can start an email, edit a document, or surf the Web on your Mac, and then pick up where you left off on your iPhone. This makes a Mac inherently more useful to an iPhone owner than a comparable Windows-powered computer. The same can be said for the iPad and Apple Watch, versus other tablets and wearable devices. Thus, once people enter Apple's ecosystem by buying one of its devices, they're much more likely to buy another Apple device instead of that of a competitor. This is Apple's so-called "halo effect," and it continues to serve the company well.
Moreover, Apple's booming services business -- which includes the App Store, iTunes, Apple Pay, and Apple Music -- is helping to strengthen this halo effect and make its products even more "sticky."
People spent nearly $40 billion on App Store purchases alone in 2017. That's more than twice what was spent on Google Play during that same time. This is an important advantage for Apple, because once someone purchases apps on an iPhone, that person is much less likely to switch to an Android-powered phone, since he or she could have to repurchase the apps to continue using them.
Apple Music and Apple Pay likewise help to increase the switching costs for users, thereby further strengthening the tech titan's ecosystem. They're also helping to bolster a rapidly growing stream of recurring revenue from the more than 1 billion Apple devices currently in use.