I like to follow the investments of successful investors to see if I can identify opportunities that have a high likelihood of being both Halal and profitable.
Towards this end, I try to keep up to date with Berkshire Hathaway’s portfolio of investments.
For those who are unfamiliar, Berkshire Hathaway is the company operated by legendary investor Warren Buffet.
Warren Buffet has amassed a fortune of $82 Billion dollars from his investments and is widely regarded as one of the most if not the most successful investor of our time. 
His company Berkshire Hathaway has averaged an annual growth in book value of 19.0% for its shareholders since 1965 (compared to 9.7% from the S&P 500 during this period). 
In this article, I will analyze one of Berkshire Hathaway’s larger investments: Apple.
Specifically, I’m going to examine the case for and against the halalness of investing in Apple stock and the prospects for profitability from such an investment.
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Criteria for Halal Stocks
- Is the company’s primary business Halal? Put differently, can I describe the amount the company earns from non-Halal sources as trivial?
- Is it clear to me that the world is better off because this company exists?
- Gut check: Am I ok with publicizing my investment in this company?
The answers to the above questions will often not be clear cut. Accordingly, rather than saying that investing in a particular stock is certainly halal or certainly haram, I think it’s more accurate to provide a halalness rating if you will from 1 to 10 with 10 being certainly halal and 1 being certainly haram. Most stocks will end up falling somewhere in between these two values.
To provide this halalness rating, you have to look at the overall body of work for a particular company and then use your best judgment when assessing the halalness of investing in that particular stock.
Accordingly, the halalness rating I am about to assign to Apple represents my own judgment based on what I know about Apple.
I encourage you to use your own judgment to ascertain whether my Halal rating makes any sense to you or not.
Apple’s Halalness Rating
I’m assuming most of you are familiar with Apple and its products, perhaps most well known for its mobile devices such as the iPhone, iPad, Mac, iPod, Apple Watch, Apple TV, iOS operating systems, iCloud, Apple Pay and a range of accessories, service and support offerings.
Here’s a breakdown of Apple’s business by product in Q3 2019: 
Services include: AppleCare, Apple Pay (makes money through transaction fees), Apple Store, iTunes, iCloud and Apple Music 
None of the product segments that showed up in Apple’s most recent Quarterly filing strike me as being inherently haram.
However, on August 20th of this year, they came out with a credit card.
It is not clear yet how this card is performing, but so far all indications suggest that any interest it has collected from these cards remains a rather trivial part of their overall business. To the extent that the interest Apple collects from its credit card becomes a non-trivial amount of its overall business, my halalness rating of an investment in Apple will suffer.
I don’t see this happening in the near term since their card is rather lousy for many reasons, including bottom-of-the-barrel cash-back rates and a zero sign-up bonus. It’s something to keep an eye on though for sure.
Is Apple an overall positive for the world?
I think so. The benefits it has made possible through its products and technologies have been enormous. There is barely a practical need for which you can’t find an iPhone app that makes meeting that need easier.
Whether it’s staying in touch with friends and family, budgeting your finances or keeping track of your health, Apple products have provided enormous services to a huge segment of the human population.
Would I feel comfortable publicizing an investment in Apple?
Their recent push into the credit card space makes me less comfortable to do so. Even though I don’t think that part of their business will become substantial any time soon, it still rubs me the wrong way.
As if consumers didn’t have enough companies trying to suck the financial blood out of them, Apple succumbs to its temptations and joins the list of companies engaged in the trashy activity of targeting low-income consumers and encouraging them to borrow for their consumption needs so they can collect interest from them. Shame.
In light of everything I mentioned, I’ll rate the Halalness of an investment in Apple’s business an 8/10.
I dinged them two points primarily for coming out with their garbage credit card.
Is Apple a good investment from a financial standpoint?
Around 5% of Apple shares are owned by Berkshire Hathaway.
One may think 5% isn’t that large, but they would be forgetting that Apple is a trillion-dollar company. 5% of 1 Trillion is $50 Billion dollars. That’s a massive investment that suggests a strong degree of confidence Warren Buffet must have in Apple.
However, I am not the one to blindly follow anyone even if that someone is Warren Buffet.
Pros and Cons of an Apple Investment
It’s important to note here that the timeline for my investment forecast is 3 to 5 years. Trying to forecast for an individual stock beyond 5 years seems like a futile exercise since so much can change in 5 years, less than 3 years also seems too short a time for predictions to come to fruition:
The Pros of an Apple investment are:
According to one study, Apple has the strongest brand in the world with an estimated brand value of $215 billion. 
Brand value is rather important for a company because customers are often willing to pay a higher price because they deem the brand to be of high quality and/or a status symbol.
Apple customers’ brand loyalty has created a rather effective moat around their business, particularly their iPhone business, which accounts for roughly 50% of Apple’s sales.
Fairly Priced: The stock is fairly priced relative to its peer group. As of today (2019-10-08), Apple’s share price is USD $224. Apple’s Forward Price/Earnings ratio for today is around 17. That is about as cheap of a forward earnings multiple as you will find in big tech.
Apple pays a dividend (Apple’s Dividend Per Share/Share Price is around 1.5% as of 10/8/2019).
This is nothing to scoff at, especially given the huge pile of cash that Apple is sitting on ($210 billion total cash, $100 billion in cash net of debt) which makes the continuation of the trend of increasing dividends that Apple has been on since 2012 probable. 
The Cons of an Apple investment are:
Too Heavy a Reliance on Brand Strength
My primary beef with Apple as an investment is that I see them as being too reliant on the strength of their brand and not reliant enough on real innovation.
Frankly, I don’t remember any meaningful innovation coming out of Apple since Steve Jobs passed away.
Don’t get me wrong, I enjoy animated emojis as much as the next guy, but I expect more from a company that has $210 billion in cash at its disposal.
Accordingly, while I concede that it will be hard to compete with Apple’s phones in the near term, I don’t see Apple growing from here that much.
Eventually, it’s brand will lose power if they don’t start putting out truly unique products that justify their higher price point.
I personally have had a version of their phone for the last decade now, probably because of inertia and the fact I’ve gotten used to their operating system more than anything, but to be honest I’m not sure how long this will last.
If another company comes along with something compelling enough I may switch.
Frankly, I’ve gotten tired of shelling out $1,000 every couple of years for a phone with a slightly better camera.
So my overall rating of Apple stock is a solid: meh.
I see it as having both a low risk and low return profile over the next 5 years.
It’s not a terrible investment but if you’re going through the trouble of picking individual stocks as opposed to just investing in a well-diversified mutual fund or ETF, you have to be absolutely smitten with your stock pick.
Investing in individual stocks should be reserved for the abnormally attractive opportunities, the no brainers.
I don’t think Apple stock meets this threshold.
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If you would like me to analyze a particular stock in the future, or have a request for me to evaluate a particular topic, leave it in the comment section below. I read all the comments although I may not respond to all.