Should I buy Apple stock near a 52-week high?

Apple (NASDAQ:AAPL) stock may be underperforming the S&P 500 this year — down 2% versus a 12% gain for the index — but it’s hardly in trouble. It’s still up 122% over five years. And it’s only around 7% off an all-time high, despite all the uncertainty around tariffs.

This is testament to the company’s extremely high quality. So should I add Apple stock to my portfolio? Here are my thoughts.

Reasons to invest

There are many reasons why I would consider Apple as an investment. The most obvious is that I’m very familiar with its products and services, and I can see first-hand how sticky the ecosystem is.

For example, I have long had my iPhone and the switching costs seem enormous to me. Every couple of years I’ll upgrade my phone but stay with Apple.

Of course, the switch to a rival phone maker may be not be as painful and problematic as I imagine. But the thought of having to redo all my passwords and/or losing information just doesn’t seem worth the risk, especially when I love the product anyway.

I also have AirPods and a subscription with Apple Music. And rumour has it that the company is working on a set of smart glasses that will rival Meta‘s popular AI-powered Ray-Bans.

I love the idea of seeing a map projected onto the ground through the glasses — no more looking down at my phone and nearly wandering into traffic! So I may consider a pair when they come out, as I imagine they’ll pair seamlessly with my phone.

Beyond this brand and product affinity, the company‘s incredibly profitable. Last year, it reported a net profit of almost $100bn.

Finally, Apple also has tremendous leadership in Tim Cook. Indeed, it’s been nearly 30 years since it had a CEO other than Steve Jobs or Cook! I find this level of long-term stewardship and continuity very attractive.

By contrast, a revolving door in the C-suite is always a red flag for me.

Reasons to be cautious

One thing that has made me a bit cautious about Apple in the recent past is its lack of innovation. There hasn’t been a new product that has moved the needle for some time.

That said, evolution rather than revolution is not necessarily a bad thing. Investors were impressed with the company’s latest line-up of products, including the new extra-thin iPhone Air phone.

But there’s no disguising the fact that the company’s high growth days are behind it. Wall Street expects just 5%-6% revenue growth moving forward, which doesn’t seem attractive when the price-to-sales ratio is already a sizeable 8.9.

It’s a similar story with the bottom line. The stock’s trading at 36 times earnings, despite just 8%-10% earnings growth pencilled in. And there’s a risk that tariffs could hurt profits.

Put simply, Apple appears to be priced like a growth stock when it arguably isn’t anymore. That’s not to say it shouldn’t carry a premium, because I think it should as one of the world’s best brands and tech companies.

But the current valuation looks a bit pricey relative to the growth, in my opinion. The dividend yield is also minimal at 0.43%.

Weighing things up, I reckon there are better opportunities out there for my portfolio today.

The post Should I buy Apple stock near a 52-week high? appeared first on The Motley Fool UK.

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Ben McPoland has no position in any of the shares mentioned. The Motley Fool UK has recommended Apple and Meta Platforms. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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