After the recession of 2022 and a looming recession-induced sell-off, it will be important this year to invest in resilient and reliable companies with strong long-term growth potential. By purchasing shares in companies participating in high-growth markets, you can protect your investment from short-term market volatility.
apple (AAPL 1.19%) When Amazon (AMZN 1.48%) It has strong positions in some of the most profitable markets and should deliver sustained growth over the next few years. These companies may continue to expand in the long term despite temporary economic challenges.
Both Apple and Amazon have promising long-term prospects, but 2023 is arguably the better buy. Let’s evaluate.
Apple’s stock has fallen 22% since January of last year. Nasdaq-100 Technology Sector The index fell 29% over the same period.
Despite the market decline, Apple’s fiscal 2022 revenue grew 8% year-over-year to $394.3 billion, while operating profit increased 9.6% to $119.4 billion. This growth is largely due to the company’s leading position in consumer electronics and online services.
For example, competitors microsoft reported slightly lower PC revenue in Q3 2022, but Apple’s Mac segment grew 25% year-over-year to $11.5 billion.
The company has come under scrutiny in recent months for its reliance on China to manufacture iPhones. Towards the end of last year, Apple’s stock fell 14% after tightening COVID-19 restrictions strained factories. However, stock prices are beginning to recover as production improves.
Meanwhile, its burgeoning services business shows the company is smartly diversifying its revenue over the long term. In fiscal 2022, Apple’s services revenue grew 14% year over year to $78.1 billion, doubling the 7% growth rate of iPhone revenue. Meanwhile, the profit margin for services was 71.7%, and the same metric for products was 36.3%.
Apple’s stock price may have lost some momentum over the last 12 months. But its ability to continue to dominate consumer product sales in an economically difficult year, and rapid growth in its services business, proves the company is resilient and worthy of long-term investment. .
The company is entering 2023 after a year of forgetting its 38% year-over-year stock price decline. The company’s stock has climbed 17% since January 1 and is still rising. The rise appears to be due to his 0.1% drop in the Consumer Price Index, suggesting easing inflation and an expansion of Amazon’s Buy with Prime program.
Prime purchases allow all eligible US retailers to offer Prime benefits like free shipping and returns on their non-Amazon sites.Optimistic analysts believe the program will make the company more competitive Shopify You can also boost Amazon’s revenue by expanding your net and capturing sales from virtually any e-commerce site.
After the sharp decline Amazon’s e-commerce business experienced last year, the prospect of Buy with Prime will be on the ears of investors. In the third quarter of 2022, the e-commerce segment reported his $2.87 billion operating loss, while the cloud computing business accounted for 100% of his operating profit.
Amazon Web Services consistently reports strong quarterly growth, with e-commerce sales accounting for 84% of the company’s total revenue in Q3 2022. A promising step in that direction.
Amazon and Apple are giants in their respective markets, holding major market shares in some of the most profitable industries. But a comparison of last year’s performance under economic stress suggests that Apple is the clear winner and a more reliable investment.
And while Amazon’s stock trades at 90x earnings, Apple’s price/earnings ratio is much better at 22x.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Dani Cook has no positions in any of the stocks mentioned. The Motley Fool has positions and endorses Amazon.com, Apple, Microsoft and Shopify. The Motley Fool’s recommended options are Shopify for a long $1,140 call in January 2023, Apple for a long $120 call in March 2023, Shopify for a short call at $1,160 in January 2023, Here’s a March 2023 $130 short call at Apple. The Motley Fool’s U.S. headquarters has a disclosure policy.