Alibaba vs Apple Which Is a Smarter Choice?

Alibaba Group Holding Limited and Apple Inc. are two of the most prominent and successful companies in the world of technology and e-commerce. Both of these companies have a strong presence in the global market and have experienced significant growth in recent years. However, there are key differences in their business models, target markets, and performance in the stock market. This article will explore the similarities and differences between Alibaba and Apple stocks, and provide insights into their respective strengths and weaknesses.

Alibaba or Apple?

When comparing Alibaba and Apple, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Alibaba and Apple.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Alibaba has a dividend yield of 3.01%, while Apple has a dividend yield of 0.4%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Alibaba reports a 5-year dividend growth of 0.00% year and a payout ratio of 54.40%. On the other hand, Apple reports a 5-year dividend growth of -19.56% year and a payout ratio of 16.25%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Alibaba P/E ratio at 18.25 and Apple's P/E ratio at 40.16. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Alibaba P/B ratio is 1.65 while Apple's P/B ratio is 66.10.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Alibaba has seen a 5-year revenue growth of 2.38%, while Apple's is 0.82%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Alibaba's ROE at 8.88% and Apple's ROE at 137.87%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $87.24 for Alibaba and $246.24 for Apple. Over the past year, Alibaba's prices ranged from $66.63 to $117.82, with a yearly change of 76.83%. Apple's prices fluctuated between $164.08 and $250.80, with a yearly change of 52.85%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.