To The Moon

My choice of a high ROIC company is none other than the $Apple(AAPL)$of my eye. It has an enormous cash pile that allows it to invest in all Internet of Things and broaden its product lines and services to harvest the loyalties of its followers. It has high pricing power by virtue of its strong brand and customer loyalty. It also has strong bargaining power over its suppliers, many of whom list Apple as their top customer that they cannot afford to lose. It is also moving up the supply chain to control many of the components going into its products. Apple has been the leader in many of the market segments in which it competes, and has continually invested in innovations to maintain its lead over its peers. In fact, it has been able to set the market trend and reap first mover advantages before its competitors jump onto the bandwagon. Despite its huge market opportunities and operating excellence, its share price has not kept up due to geopolitical conflicts that has resulted in economic sanctions against Russia, and supply chain disruptions such as temporary shutdowns of factories of its suppliers and delay in ports operation as a result of COVID lockdowns. Hence, its valuation is depressed for now, but also presents an opportunity for long-term investors. The rising inflation may be less of an issue for Apple with high pricing power against its customers and suppliers. The rising interest rates may not pose as much challenges to Apple due to its strong near-term cash flows, unlike those tech companies which are unprofitable now and their valuations rely on expected cash flows incoming in the far future and hence are heavily affected by rising interest rate.