Apple (NASDAQ: AAPL) shares are a popular investment among retail investors and institutions alike. It’s easy to see why. This is one of the world’s most dominant companies. And it has a great track record when it comes to generating wealth for investors.
Here’s a look at how much I’d have today if I’d invested $5,000 (the stock is listed in the US) in the mega-cap technology company five years ago.
An amazing investment
It’s fair to say that Apple shares have been an amazing investment over the last half-decade.
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Five years ago, the stock was changing hands for around $43 (accounting for the 4-for-1 stock split that took place in 2020). Today, however, the stock is priced at $166.
This means that if I’d invested $5,000 in the company five years ago, my money would now be worth around $19,300. That’s an excellent result.
It gets better though.
You see, over the last five years, I would have also received a steady stream of dividends from the tech company. These are cash payments that some companies make to investors out of their profits.
Now, the yield here isn’t high. Currently, it’s less than 1%.
But the income received would have boosted my investment returns a little.
Overall, I’d be very happy with my returns from the tech stock.
Worth buying today?
Is Apple a good stock to buy today?
That’s a difficult question to answer.
I do see Apple as a great stock for investors to own for the long term.
I started buying Apple shares for my own portfolio in late 2018, and today I’m sitting on a very healthy profit. Currently, they’re my second-largest holding overall. I plan to hold for the long run.
However, I don’t think I’d buy them right now. There are few reasons why.
Firstly, the shares are up almost 30% this year and are close to their all-time highs. This leads me to believe they could face a minor pullback soon.
Second, Apple’s price-to-earnings (P/E) ratio is quite high today. Currently, it’s about 28. That’s a lofty valuation.
Third, quite a few experts see the stock as a bit expensive at present. An example is Fundsmith manager Terry Smith. He started a position in Apple last year when the stock was trading at a lower price. However, he recently said that he’s waiting for a pullback to buy more shares because he thinks the stock is a little overvalued currently.
Better buying opportunities ahead
Ultimately, my view here is that it’s worth waiting for a pullback.
I reckon that in the months ahead, there will be better opportunities to buy the shares. I suspect that at some stage, the stock will be available to buy at a price of less than $150.
Right now, I think there are a few other growth stocks that offer a better risk/reward proposition than Apple.
