Warren Buffett, one of Apple’s largest shareholders and most prominent cheerleaders, believes Apple is the best business he knows in the world. Throughout the iPhone’s upgrade cycles, Apple has consistently improved its design and functionality to meet ever-changing consumer tastes. Perhaps most importantly, the iPhone’s camera gets better with every new version. iPhone users can quickly snap the highest-quality selfies and videos of their kid’s soccer games and post them to social media in a heartbeat.
Buffett has referred to the iPhone as a “sticky” product, meaning customers repeatedly return to Apple’s smartphones. Aside from the iPhone’s design appeal, users like the brand because of its add-on services. iPhone users can purchase additional iCloud storage, download music from the Apple Music app, and conduct touchless payments with Apple Pay…
Another reason Buffett likes Apple is its share repurchases. The company has religiously retired shares over the last 10 years, which increases the percentage of the company existing shareholders own. Similarly, repurchasing shares en masse also increases its earnings per share, all else being equal.
When you combine Apple’s business advantages over other companies with its ability to retire shares at a prodigious clip, you have a stock that has a high probability of outperforming the market over the next five years.
