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Better Buy: Roku vs. Apple

Let’s make this short and sweet, dear reader. Roku (NASDAQ:ROKU) is a strong buy right now. Apple (NASDAQ:AAPL) isn’t.

I see Roku as one of the best buys on the market today; I added to my Roku position in my personal portfolio as recently as March 17. This is a skyrocketing growth stock on the rise, and the COVID-19 crisis will only help Roku accelerate its business growth — streaming media platforms are a hot ticket right now. That’s simply the start of a long-term wealth-building investment idea.

Apple is a very different story. Cupertino always struck me as a one-trick pony, and that single horse looks mighty tired these days. The one-two punch of coronavirus fallout and the simmering Chinese-American trade war will add up to a terrible year for Apple, and the company’s best days may already be behind it. I’ve never owned a single share of Apple, and that’s not changing any time soon.

Image source: Getty Images.

Not the Apple of my eye

You know Apple’s single trick. iPhones and iPads accounted for 63% of Apple’s total sales in the first half of fiscal year 2020. A large slice of the company’s revenue from services also falls in this category, though Apple won’t tell us exactly how much. Take away the iOS platform, and the company falls apart.

iPhone and iPad sales fell in the second quarter due to the economic stress and manufacturing infrastructure challenges that sprung from the COVID-19 pandemic. However, iPhone sales also plunged 14% lower in fiscal year 2019, long before the coronavirus reared its tragic head. Mobile computing has been a hot ticket over the last decade, but it gets harder and harder to whip up excitement around the next flagship iPhone these days. 5G networking might help for a while, but even that boost will be short-lived.

Ergo, the very foundation of Apple’s financial platform is starting to crumble. Cupertino’s trillion-dollar market cap looks fragile to me. And it’s a long way down if and when the final descent starts.

Other Fools disagree, some of them passionately so. That’s fine, and it’s a core component of our “Motley” spirit. I’ll change my mind when Apple comes up with a more diverse business plan. Until then, I’m not touching this stock with a 10-foot charging cable.

The winner, please

Let me reiterate how quickly Roku is growing up before our very eyes right now. The company is unprofitable, but only because Roku is investing every dime of spare cash into accelerated growth ideas. The set-top box maker has evolved into a software and service provider for several TV makers, and Roku is poised to wear that mantle for pretty much the entire consumer electronics industry within a few short years.

Yes, that’s another one-trick pony. But this mare is young and healthy, and Roku’s business prospects are skyrocketing. Revenue jumped 52% higher in fiscal year 2019, if you want to focus on the pre-COVID era again. Apple to apples, right?

And if the charts below are telling you to pick Apple’s stock over Roku’s, I’m afraid we’ll disagree about pretty much everything when it comes to investing in growth stocks.

ROKU data by YCharts.

300-101   400-101   300-320   300-070   300-206   200-310   300-135   300-208   810-403   400-050   640-916   642-997   300-209   400-201   200-355   352-001   642-999   350-080   MB2-712   400-051   C2150-606   1Z0-434   1Z0-146   C2090-919   C9560-655   642-64   100-101   CQE   CSSLP   200-125   210-060   210-065   210-260   220-801   220-802   220-901   220-902   2V0-620   2V0-621   2V0-621D   300-075   300-115   AWS-SYSOPS   640-692   640-911   1Z0-144   1z0-434   1Z0-803   1Z0-804   000-089   000-105   70-246   70-270   70-346   70-347   70-410