Apple, co-founded by the late Steve Jobs and known around the globe for its iPhone, is the largest company in the world, measured by market capitalization. While the iconic smartphone still accounts for over 50% of the company’s revenue, its high-margin services business has been growing steadily in recent years, reaching a contribution of 20% in total sales.
In this article, we’ll share tips for choosing a stock broker to buy Apple stock, provide a step-by-step guide to help you make your first purchase, highlight exchange-traded funds (ETFs) with high exposure to Apple stock, delve deeper into the reporting structure of Apple, and more!
How to buy Apple stock (Step-by-step guide)
1. Choose a good stock broker
Since Apple is one of the few companies boasting a market capitalization of over $2 trillion, you can choose from a myriad of brokers to help you make the purchase. That said, consider the terms offered by each broker and make sure the broker you end up picking works with residents of your country. Below we highlight four brokers which offer Apple stock:
|Broker||Stock commission, US||Minimum Deposit||Available countries|
|eToro||$0||$10 (varies for different countries)||Worldwide – exceptions apply.|
|Interactive Brokers||Free for US investors. Up to $0.0035 per share with a minimum of $0.35 for international investors||$0||Worldwide – exceptions apply.|
|Trading 212||€/£0||€/£10||Worldwide. Not available in the US and other countries.|
|Saxo Bank||$0.02 per share with a minimum of $10.00||$0 to $10,000 (varies between countries)||Worldwide. Not available in the US and other countries.|
2. Open and fund your account
Once you have weighed the pros and cons of each broker, you are all set to open an account. The process usually takes a few days as the broker verifies your identity. After the process is finalised, you must deposit money into your account.
3. Place a “Buy Order”
If you have found an online broker that suits your needs, managed to open an investment account, and made the initial deposit, you are all set to buy your stock. All you have to do is find the share within your chosen broker and place a buy order. For this example, we will use eToro:
a) Search for Apple stock ( ticker “AAPL”):
b) Click “Trade”:
c) Choose the order details. Now, it’s time to choose how to invest:
- Amount: You choose the amount you want to invest in Apple instead of the number of shares. In this way, your investments may be fully or partially in fractional shares.
- Units: As opposed to “Amount,” here you define the number of shares you want to purchase (note: you can buy using either “Amount” or “Units,” up to you!)
- Leverage: You can choose the level of leverage. “X1” means no leverage (if it were “X2” or above, you would not be trading real stocks, but CFDs on Apple stock instead). That’s why you see “you are buying the underlying asset.”
- Stop Loss: Define the maximum you are willing to lose before closing your position automatically;
- Take profit: Define the profit amount that makes you close your position automatically (if reached).
Stop Loss and Take Profit are not guaranteed and trading with leverage involves high risk.
Only the “Amount” (or “Units”) and “Leverage” are mandatory fields.
d) Place the order: Finally, click “Open Trade,” and a new window will show up where it says “order filled,” your exposure, and lets you share your trade with other people.
ETFs – an alternative way to gain exposure
ETFs allow you to gain exposure to a dozen or even hundreds of companies with a single investment. ETFs can be a good option if you:
- Want to complement your Apple position with similar companies;
- Want to limit your portfolio volatility (ETFs invest in many companies operating in different lines of business, limiting your exposure to idiosyncratic risks);
- Are interested in following a specific theme in your investments (technology stocks, information technology stocks, etc);
Some ETFs you may want to consider are:
- Vanguard Information Technology ETF (ticker VGT) tracks 364 stocks in the Information technology sector, although it is heavily skewed to large capitalization companies. The ETF distributes dividends, and the expense ratio stands at 0.10%. Apple carries the largest weight in the ETF at 23.52%, followed by Microsoft at 19.31%.
- Invesco QQQ (ticker QQQ) is a broad technology ETF following the Nasdaq-100 index. The ETF distributes dividends, and the expense ratio stands at 0.20%. The weight of Apple in the ETF is 12.32%, behind Microsoft at 12.96%.
The go-to place to find up-to-date information on the company is its investor relations section, available here. Below we will provide a quick overview of the company’s operations.
Apple has a fiscal year ending on the last Saturday of September (the company is currently in fiscal 2023) and reports sales in two broad categories:
- Products – roughly 80% of revenues
- Services – around 20% of revenues
Products encompasses what the company is known for – the iPhone, the Mac, the iPad, as well as a broad category called “Wearables, Home and Accessories”. The segment got a big boost during the Covid-19 pandemic (+51% sales increase in fiscal 2021) but has seen growth slow down in recent quarters (even going negative in Q1-Q2 of fiscal 2023).
The segment has a lower profitability compared to Services, with a gross margin around 37% most recently.
Services covers a variety of activities, including Advertising, AppleCare (support and repair services), Cloud Services, Digital Content (covers the App Store and other platforms), Payment services (Apple Card & Apple Pay). The services segment has been a consistent grower over the past few years, with its revenue less exposed to product release cycles.
The segment boasts a very strong profitability, with a gross margin around 71%, almost double the Products segment.
From a geographic perspective, Apple is heavily exposed to revenue outside the U.S., with overseas revenue accounting for 60% of total sales. Thus keeping track of how the U.S. dollar is performing relative to other currencies can be helpful. An easy way to do so is the U.S. dollar index which measures the dollar’s performance relative to a basket of currencies.
As per the latest annual report (available here), Apple’s high margins are partially the result of outsourcing, making the company vulnerable to supply chain disruptions and/or geopolitical tensions:
Substantially all of the Company’s manufacturing is performed in whole or in part by outsourcing partners located primarily in Asia, including China mainland, India, Japan, South Korea, Taiwan and Vietnam, and a significant concentration of this manufacturing is currently performed by a small number of outsourcing partners, often in single locations
Last but not least, the company runs a very conservative capital structure, with a net cash position of around $57 billion as of Q2 2023.
With the corporate reporting structure behind us, we are ready to move to the next step – picking the right broker.
Apple’s Financials and Performance
Once you have purchased Apple shares, it is a good idea to keep track of how the company and its competitors are doing. In doing so, you will get greater insight into whether to add to your position, hold it, or sell it to pursue better opportunities elsewhere.
Apart from the investor relation section (available here), there are specialised platforms to help you understand how Apple is doing from a financial perspective. One platform you can use is Koyfin – you can access Company overviews, Key statistics, Financials, Transcripts, and more! Get a 20% discount on Koyfin.
For example, Koyfin allows you to get a quick handle on how the company’s revenues and margins (as measured by gross profit) are doing:
While such platforms cannot substitute your own research 100% of the time, they can be a very useful tool in the research process, saving you time and providing new investment ideas.