What will Apple's share price be?

Where will Apple shares be in 5 years?

The share price of Apple has increased by around 460% over the past five years. In doing so, the company defied the bears who claimed the heyday was over. The tech giant's annual revenue rose from $ 215.6 billion to $ 274.5 billion between fiscal 2016 and 2020, while annual net income rose from $ 45.7 billion to $ 57.4 billion.

But can Apple maintain that momentum over the next five years? Let's take a look at the long-term roadmap.

The next two years

Analysts expect Apple's revenue to grow 21% in fiscal 2021 and another 4% in 2022. Most of this growth will come from new hardware devices and the expansion of the service ecosystem.

The iPhone 12, Apple's first family of 5G devices, is expected to trigger a new wave of upgrades this year. According to the latest supplier estimates, 230 million iPhones could be shipped in 2021. That would correspond to a growth of 14% compared to 2020. It would mean the best year for the device since 2016.

Strong shipments of the iPhone, which generated half of Apple's sales in 2020, should attract more users to the growing service ecosystem. This includes the App Store, Apple Music, Apple TV +, Apple Arcade, Apple Pay and other services. Apple generated 20% of its revenue from these services last year and recently hit 600 million paid subscribers across the ecosystem.

Apple will continue to leverage the strength of its hardware business and closed ecosystem to engage its users. That could lead to further conflicts with companies like Spotify,Netflix and Amazon to lead. These conflicts could be costly, but Apple still had nearly $ 196 billion in cash and tradable securities in the safe last quarter. So you can afford the competitive battle.

As for the rest of the hardware business, investors can expect Apple to launch new versions of the Mac, iPad, Watch, and AirPods every year. The new Macs will run on Apple's own ARM-based CPUs instead of Intel's x86 CPUs. Apple could even build more of its own chips into other devices to streamline the supply chain and increase margins.

Expansion of the AR business

Apple is reportedly developing an augmented reality (AR) headset that is slated to launch in 2022. This device could be followed by lighter AR glasses in 2023.

The details of these devices are slow to trickle in, but they could help Apple with that Microsoft and Facebook Keeping pace with emerging virtual and augmented reality markets. Microsoft's HoloLens is still an expensive device, while Facebook plans to expand its Oculus VR business to the AR market between 2023 and 2025 with lightweight glasses.

Apple often rearranges markets by making early movers reveal their weaknesses. The company has already done this with MP3 players, smartphones, tablets and smartwatches. It could take a similar approach for AR glasses. Because these products haven't seen a mainstream breakthrough in recent years.

A successful market launch of the “Apple Glasses” would complement the iPhone, Apple Watch, AirPods and other devices in order to bind users to the ever-growing ecosystem. It would also further reduce Apple's dependence on the iPhone. This might pave the way for the introduction of the “Apple Car” a few years later.

Apple is reportedly developing an electric driverless vehicle and has already had discussions with several automakers. Analysts expect the car to hit the market sometime between 2024 and 2027. It is expected to come with a full suite of Apple's software and AR services. Taken together, Apple's AR devices and automotive efforts could finally help the company expand beyond the iPhone. That would make you a fully diversified tech giant.

Higher dividends and bigger buybacks

Apple's core business can still grow strongly. Apple will likely continue to reward patient investors with higher dividends and bigger buybacks.

Apple is only paying a dividend yield of 0.6% today. But the low payout ratio of 22% suggests the company has plenty of headroom for future hikes. Apple has already reduced its outstanding shares by more than 20% over the past five years, and that reduction is likely to continue for the foreseeable future.

So where will Apple shares be in five years?

You can't say exactly. But I believe the stock is the S&P 500 will clearly surpass.

The company's core businesses are still going strong, the company is on fire, and the stock is still trading at less than 30 times projected earnings. The stock could still be volatile every now and then. But investors who just keep Apple - instead of trading it - could be richly rewarded over the next five years.

The post Where will Apple shares be in 5 years? appeared first on The Motley Fool Germany.

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The Motley Fool owns shares of and recommends Amazon, Apple, Facebook, Microsoft, Netflix, and Spotify Technology. Leo Sun owns shares of Amazon and Apple. This article was published on February 4th, 2020 on Fool.com and has been translated for our German readers.

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