What a difference a year can make. At the beginning of 2014, Apple (NASDAQ:AAPL) was widely viewed as a struggling tech giant that had lost its taste for innovation. Doubt reached its pinnacle when shares plunged 8% in a single day after the company reported mixed earnings and a disappointing outlook. However, shares rebounded to finish the year with a 38% gain. Now, Apple is off to an amazing start in 2015 after reporting its best March quarter in history. Some investors may believe the upside is limited, but there are at least five core reasons why you should still buy Apple.
The most crucial ingredient of running a successful business is the ability to attract customers and earn a profit. In Apple’s case, money practically grows in an orchard as far as the eye can see. Apple’s net income of $13.6 billion in the fiscal second quarter that ended March 28, 2015 is one of the most profitable quarters for any company in history. The only rivals are previous quarters from Apple and energy-related companies.
Apple receives the majority of its revenue from the iPhone. In the most recent quarter, total iPhone sales reached $40.3 billion, up 55% year-over-year and nearly three-fourths of Apple’s $58 billion haul in the quarter. The Mac and iPad product lines followed at $5.6 billion and $5.4 billion, respectively. The success of these products lead some people to believe that Apple is merely a hardware company, but software such as iOS, iTunes, iCloud, and the App Store help build an ecosystem that keeps customers coming back.
During the first week of January, the App Store set a new record for billings with customers around the world spending nearly half a billion dollars on apps and in-app purchases. Furthermore, New Year’s Day 2015 marked the single biggest day ever in App Store sales history. In fact, the recent quarter was the App Store’s best ever, with a record number of customers making purchases and 29% year-over-year revenue growth.
Apple’s impressive profit history has also allowed it to accumulate and distribute an unprecedented amount of cash. Taking the total of Apple’s cash and cash equivalents, short-term marketable securities, and long-term marketable securities, the company’s cash position grew to $193.5 billion at the end of March. Apple has $40 billion in long-term debt, but this is due to its record capital return program. Through March 2017, Apple will return $200 billion to shareholders through dividends and share buybacks. Using debt to accomplish this helps Apple reduce its taxes.