It’s an exciting time for investors looking to buy on the dip, but getting that strategy wrong could hurt your portfolio. Apple (NASDAQ: AAPL) remains wildly popular, but you might get better results from an ETF that tracks the Nasdaq, such as the Invesco QQQ Trust (NASDAQ: QQQ). As always, the most suitable option depends on personal factors, so consider them before making a choice.
Apple is tech royalty
Apple is the largest publicly traded company in the world, based on market cap. The company has delivered steady revenue growth over the past 20 years. There have been a number of bumps along the way due to recessions and competitive conditions, but the overall trend has been sharply upward due to a series of popular consumer devices and associated software.
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Apple isn’t quite reaching the same growth rates that it delivered at a smaller scale, but its most recent results were still impressive. The company reported 9% sales growth in the first quarter of 2022, and it generated $28 billion in operating cash flow during the quarter. That’s really impressive for an enormous global business with formidable competitors. With an annual R&D budget around $25 million, Apple is clearly committed to sustaining its place as a global consumer tech leader.
Apple could be a compelling play for investors who want to capitalize on the rise of virtual and augmented reality. The company doesn’t have a device on the market right now, but there are rumors that it’s launching a headset in the not-so-distant future. Apple’s potential entry into VR would be assisted by its powerful presence in the content, consumer software, and mobile device markets.
Investors can buy the stock at a forward P/E ratio of 24, which is pretty reasonable at the current growth rate. It’s not the cheapest stock in the world, but investors who like the company should be comfortable with this valuation for long-term gains.
The case for owning the index
There’s a classic trade-off between owning an entire index rather than an individual stock. The best possible returns come from hitting it big with one stock. Owning an index means that the losers are dragging the winners back down to the average.
On the other hand, owning a diverse bundle means that you’ll never experience the catastrophe of one stock falling short of expectations. There …….