Any list of the most successful companies of all time would no doubt include Apple (AAPL -0.14%). By focusing on design and the user experience, Apple created innovative and disruptive products that consistently joined the cultural zeitgeist. The iPod was the first of its products to achieve mass adoption, but Apple continued an unprecedented winning streak with the iPhone, iPad, Apple Watch, and AirPods.
These fan-favorite products weren't the first to market, but each soon dominated their respective categories. As a result of its long history of success, Apple has the distinction of being the world's most valuable company, the first U.S. company to achieve market caps of $1 trillion, $2 trillion, and $3 trillion, respectively.
Recent data released by Piper Sandler includes three reasons investors should buy Apple stock and never sell.
Image source: Apple.
The underlying data
Just this week, Piper Sandler released its 46th semi-annual Taking Stock With Teens survey, which tallied responses from 9,193 teens in Generation Z. The report assesses discretionary spending, fashion trends, technology, and brand and media preferences of high school students across the U.S.
As in previous surveys, Apple products and services featured prominently, which points to the enduring attraction of the company's devices and the continuing utility of its services. Three key points in the survey should be of keen interest to Apple investors.
1. Generational demand for the iPhone
The word "dominate" is often thrown around pretty freely, but in this case, it isn't merely hyperbole. A whopping 87% of teens reported owning an iPhone, a percentage that has been consistently rising in recent years. In the fall of 2017, 78% of teens reported owning an iPhone, which illustrates the increasing appeal of the iconic device. Furthermore, 88% of teens expect their next mobile device to be an iPhone, up from 82% in 2017.
This is important to Apple investors as the iPhone represents the lion's share of the company's sales. For the company's fiscal 2022 (ended Sept. 24, 2022), the iPhone was responsible for 52% of Apple's revenue. That trend continues. For the first nine months of fiscal 2023 (ended July 1), iPhone accounted for 53% of Apple's revenue.
The iPhone is the foundational product in Apple's ecosystem, and all other products and services revolve around it.
2. The iPhone is a gateway product
Once a consumer owns an iPhone, chances increase significantly that they will purchase other Apple products, many of which are designed to augment the iPhone experience. 34% of the teens surveyed reported owning an Apple Watch, which is largely a companion product whose functionality is deeply integrated with the iPhone.
During the fall of 2016, just 5% of teens planned to buy an Apple Watch, a percentage that has steadily increased in each successive survey. In fact, by early 2021, Apple Watch overtook Rolex as the favorite watch brand of upper-income teens and has retained the No. 1 position ever since.
3. The Apple ecosystem makes the iPhone even stickier
It's hard to overstate the importance of Apple's growing ecosystem and how pervasive its products and services can be. Take something as simple as paying for retail purchases. While many older consumers still rely on credit and debit cards, payment apps are the order of the day for teens.
This is another area where Apple ranked supreme. Apple Pay was the No. 1 payment app used over the past month, at 42%. For context, Block's Cash App came in second with 27%. This helps illustrate how much of a lead Apple has amassed over its fintech rivals.
What all this means for Apple
The importance of Apple's appeal to younger buyers can't be overstated. While teens aren't yet the primary wage earners, they are establishing their likes and dislikes, which will help inform their buying patterns for years to come.
The sheer dominance of the iPhone among teens and the strong demand for ancillary products and services illustrates that -- all things being equal -- demand for Apple products should continue for years to come.
That's good news for Apple -- and its investors.
