Apple (NASDAQ: AAPL) has become known for launching products that make a splash. That led to large revenue and profit growth that fueled share price gains, creating a lot of wealth for long-term shareholders. The business has a market capitalization of over $3 trillion, putting it in rarefied company.
Narrowing the time frame, how much money would you have if you had invested $5,000 in Apple shares five years ago?
Wealth creator
Apple’s stock, selling for about $50 five years ago, closed Monday at $209 after a pullback following the news that Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) sold about half of its stake in the company during the second quarter. Notably, share prices and returns take into account the 4-for-1 stock split in 2020. That translates into a share price gain of 310% during this time, easily outpacing the S&P 500 index’s 76.9% gain.
You also would’ve collected dividends during this span that would have boosted your total return to 346.5%, more than triple the S&P 500’s 97.9%. Combining the price gain and dividends, your initial $5,000 investment would’ve more than quadrupled to over $22,000.
While you could have sold and locked in nice gains, Apple investors’ patience has been handsomely rewarded. For instance, selling after three years would’ve resulted in a 52% return and you would’ve received over $7,600 in proceeds. That means you would’ve missed large returns over the past couple of years.
Is further patience warranted? Berkshire Hathaway, run by Warren Buffett, well known for his longtime investing horizon, seems willing to take profits.
Apple’s shares sell at a 35 price-to-earnings (P/E) ratio, a premium to the S&P 500’s 29 multiple.
Hence, the market has high expectations for the company’s profitability growth. I’m cautious given Apple faces more intense competition for its core iPhone product, which accounts for about half of its sales. In the latest quarter, iPhone sales fell 0.9% to $39.3 billion.
Should you invest $1,000 in Apple right now?
Before you buy stock in Apple, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Apple wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $615,516!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of August 6, 2024
Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.
If You’d Invested $5,000 in Apple Stock 5 Years Ago, Here’s How Much You’d Have Today was originally published by The Motley Fool
