As far as large-cap technology investments have gone in recent decades, few have performed as well as Apple Inc. (NASDAQ:AAPL). This stock has been one of my perpetual top picks for quite some time. Few companies have been able to produce the absolutely magnificent and unbelievable levels of cash flow generation and growth over such a long period of time.
In this article, I am going to discuss the one key reason I believe Apple has been able to generate said cash flows, as a template of what investors ought to look for in a long-term investment.
Apple’s durable competitive advantage (what Warren Buffett often refers to as a "moat") is among the most desirable to investing world has ever seen. The company’s closed-loop product ecosystem is driven by incredible levels of brand loyalty from the company’s core customer base.
This has driven top and bottom-line growth which other companies can only have dreamed of. Apple’s size and ability to innovate and work new products into its ecosystem over time have driven its market capitalization to become the most valuable company in the world for most of the past decade.
Long-term investors seeking quality and safety along with dividend and capital appreciation growth should look at Apple as a template of a company to buy and forget about for a decade or two. A durable competitive advantage can come in many forms. However its ultimate value cannot be understood by long-term investors, and ought to be cherished.
Invest wisely, my friends.
