1 stock that turned $1,000 into more than $1.7 million

Every investor would agree that the stock market is a fantastic asset class that allows people to build life-changing wealth. Synthesis can work its magic and bring about extraordinary results.

However, there are certain companies that have completely dominated the market. S&P 500. Take a look at the tech giants apologize (AAPL 0.86%). The iPhone maker has delivered a total return of 170,000% to shareholders since it began trading on the public markets in December 1980. This huge gain means that $1,000 invested back then would be worth an incredible $1.7 million today.

Apple has undoubtedly been one of the most notable success stories of corporate America. So it’s worth looking back and trying to understand what factors contributed to Apple’s growth. Then we can answer as follows. Consumer Discretionary Stocks A worthy addition to your portfolio today.

One of the most valuable companies in the world

As of this writing, Apple is worth a whopping $2.7 trillion. Only microsoft It has a higher market capitalization. A company can’t get that kind of valuation if it doesn’t do a few things right.

The reason Apple’s stock price has performed so well is precisely because the company’s revenue and earnings have soared historically. Perhaps the most important factor driving this business is its incredible brand power. economic moat Block competitors. Selling a popular hardware device that consumers absolutely love also gives Apple pricing power.

When it comes to hardware, this business may be second to none when it comes to product innovation. The iPhone may be the greatest single product launch in modern history, both from a financial standpoint and how it impacted society. These capabilities extend to other areas in terms of the hardware and services Apple provides.

Apple may be an American-born company, but there’s no denying that it has become a global icon. In fiscal 2023, the majority of our total revenue was generated outside of the United States. This represents a broad appeal for consumers around the world.

Should you buy Apple stock right now?

Apple stock has been a big winner recently as well. Over the past five years, the stock price has risen 249%, outperforming the entire stock market. Nasdaq Composite Index. The great Warren Buffett is such a huge fan of this business that Apple has gained a whopping 43% share of the market. Berkshire HathawayThis is today’s portfolio.

But with the stock down 12% from the high it reached late last year, is Apple a wise choice? To be clear, I don’t think investors should add this business to their portfolios. There are two reasons why I feel strongly about this view.

First, Apple’s growth prospects. This is a very mature company today. Even though its new features may not be as game-changing as they were a decade ago, it’s still relying heavily on the success of the iPhone, hoping that consumers will continue to upgrade their devices frequently.

Yes, our services segment is reporting solid revenue growth. But that wasn’t enough to prevent Apple from posting a decline in revenue in fiscal 2023. There is no reason to believe that the company will be able to launch innovative products to achieve meaningful sales growth going forward.

Apple’s current valuation leads us to believe its earnings potential is limited. You can scoop up shares today in one go. Price to Earnings Ratio 27.3. A valid argument can be made that a business that is profitable and has a competitive advantage like this deserves recognition for its value. However, I believe this is an expensive entry point that significantly reduces Apple’s chances of outperforming the S&P 500 in the coming years.

This stock has been a huge winner in the past. I’m not sure if that trend will continue.