All eyes will turn to Apple (NASDAQ:AAPL) this afternoon, as the country’s most valuable company by market cap unveils its shiny new iPhone. There’s plenty of buzz surrounding the bellwether’s next smartphone. A better battery, an improved camera, and undeniably many new features will be part of the upgraded portable device.
There’s also going to be a hefty ransom to be paid to score an iPhone 13. Last year’s model fetches as much as $949. What would happen if you passed up this year’s upgrade cycle? The phone you have now is probably more than serviceable. What if you took that iPhone 13 money and bought some stocks instead?
More to the point, what if you used those funds to buy some Twilio (NYSE:TWLO), Verizon (NYSE:VZ), or even Apple itself? In this era of fractional shares, you can even buy roughly equal chunks of all three. Let’s see why these investments could be better than putting a new iPhone 13 in your hands.
If you’re an iPhone fan, it follows that you’re an App Store fan. Twilio is the leading provider of in-app communication solutions. When your food-delivery driver lets you know he or she is at your door, that’s probably Twilio. If you can reset your streaming service password without leaving the app, you can thank Twilio.
Twilio’s popularity has been booming. Revenue has climbed by 40% or better in every quarter as a public company, and growth is accelerating right now. Revenue climbed 55% last year, moving 64% higher through the first half of this year.
The stock’s been a big winner since its IPO at $15 in late June 2016. If you had invested $949 in Twilio stock at the time of its market debut, you’d be sitting on $21,258 as of Monday’s close. That’s a lot of Apple accessories to go with the new iPhone you could buy with those proceeds.
Every iPhone needs mobile connectivity, and that’s where Verizon answers the call. Verizon joins AT&T (NYSE:T) as the country’s two largest wireless carriers. Unlike AT&T, which is in the process of unloading entertainment assets and will eventually slash its dividend, Verizon is already a pure telco play.
But unlike with Twilio, this is the land of sleepy growth. You have to go back a dozen years to find the last time annual revenue rose by more than 5.4%. The three rare top-line declines in that span were in the low single digits.
Verizon is popular with income investors, and right now the stock’s yield is clocking in at a hearty 4.7%. Those payouts add up over time. If you had $949 when the original iPhone came out 14 summers ago and were to collect 4.7% a year, you would have $624 by now — along with your original $949. That’s all hypothetical, of course: The original iPhone topped out at $599. However, Verizon is a high-yielding investment that may finally deliver on the long overdue growth with the 5G upgrade revolution.
We may as well stop at the iPhone maker itself. A $949 investment in Apple stock when the first iPhone came out on June 29, 2007, would be worth $37,947 today.
Apple has gone from its modest beginnings as a maker of PCs to a juggernaut of consumer tech and related high-margin services, with a market cap north of $2.5 trillion. Apple revenue can be lumpy, and it’s been spiking every three fiscal years along with major iPhone upgrade cycles.
You can’t go wrong with Apple. It makes its bones selling premium products, and that gives it pricing power that other gadgetry makers can only dream about. Using your iPhone 13 money to buy the stock instead of the smartphone may result in one fewer device sold by Apple, but it may be the better call in the long run.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
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