To The Moon

$Apple(AAPL)$ not the safest choice? 

 It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in $Apple(AAPL)$ . While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

Apple's Earnings Per Share Are Growing

Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That means EPS growth is considered a real positive by most successful long-term investors. It certainly is nice to see that Apple has managed to grow EPS by 28% per year over three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. While we note Apple achieved similar EBIT margins to last year, revenue grew by a solid 7.9% to US$394b. That's a real positive.

In the chart below, you can see how the company has grown earnings and revenue, over time.

While we live in the present moment, there's little doubt that the future matters most in the investment decision process. 

Since Apple has a market capitalisation of US$2.1t, we wouldn't expect insiders to hold a large percentage of shares. But thanks to their investment in the company, it's pleasing to see that there are still incentives to align their actions with the shareholders. Indeed, they have a considerable amount of wealth invested in it, currently valued at US$1.3b. While that is a lot of skin in the game, we note this holding only totals to 0.06% of the business, which is a result of the company being so large. This still shows shareholders there is a degree of alignment between management and themselves.

You can't deny that Apple has grown its earnings per share at a very impressive rate. That's attractive. This EPS growth rate is something the company should be proud of, and so it's no surprise that insiders are holding on to a considerable chunk of shares. Fast growth and confident insiders should be enough to warrant further research, so it would seem that it's a good stock to follow. You should always think about risks though. Case in point, we've spotted 2 warning signs for Apple you should be aware of.

There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features.

@TigerStars  @CaptainTiger