Apple (AAPL) stock gained some ground yesterday, but all in all, this week was a disappointment for the tech darling.
Despite all the hype around the company’s highly anticipated fall event, which took place on Wednesday, investors more or less shrugged at the reveal of a revamped iPhone 6S and updates to the Apple TV, Apple Watch and iPad.
In fact, according to USA Today, AAPL stock suffered the biggest one-day drop on the day of an iPhone announcement since it revealed its cheaper line of smartphones two years ago.
The unusual downward movement was especially worrisome considering AAPL stock has been struggling for a few months now. Whiles shares of AAPL stock hovered near $133 twice in 2015 — most recently in mid-July — they’re currently sitting closer to $114. That’s more than a 14% decline in approximately two months and leaves Apple stock barely in the black since the start of the year.
But despite a flurry of media activity surrounding the muted reaction from Apple stock’s investors, I’m far from concerned about the long-term prospects of the tech behemoth, which did see buyers step back in on Thursday.
AAPL Stock – A Microcosm of the Broader Market
The broader S&P 500 and Apple stock are facing similar struggles and a similar story at the moment. And as an investor, they warrant similar reactions.
Let’s start with the broader market, which was dramatically battered on Black Monday and is sitting in the red year-to-date.
As I mentioned last week, I am largely optimistic about the long-term prospects of domestic stocks for a laundry list of reasons. As a result, it’s important to not get shaken out of the market by the inevitable blips.
Instead, savvy investors use such blips to get appealing entry points in strong, steady companies that will provide a profit for a long time.
AAPL stock is the perfect example of such a company. It’s being battered by the one-two punch of market volatility and stock-specific concerns at the moment, but it’s still the kind of company you want to hold for the long haul.
Apple boasts an established and legitimate business and is an entrenched leader in a strong industry. Sure, as Apple gets bigger, it’s going to move more slowly, but I still expect it to offer steady appreciation over the long term.
When it comes to fundamentals, the company pays a nice dividend, has juicy 22% profit margins and is slated for 28% sales growth and 41% earnings growth this year.
That earnings expansion is expected to translate to $9.12 per share for the full year, which gives AAPL stock a multiple of just 12. That’s especially appealing considering earnings growth is expected to continue at an average annual rate north of 14% over the next half-decade.
Bottom Line
Add it all up, and the recent weakness for AAPL stock is just a short-term blip for a company that still has solid long-term prospects.
Put another way, the lowest prices since January look like a good buying opportunity — and the perfect reminder to avoid being short-sighted when the going gets tough.
Hilary Kramer is the editor of GameChangers, Breakout Stocks Under $10, High Octane Trader, Absolute Capital Return and Value Authority. She is an accomplished investment specialist and market strategist with more than 25 years of experience in portfolio management, equity research, trading, and risk management. She has extensive expertise in global financial management, asset allocation, investment banking and private equity ventures, and is regularly sought after to provide her analysis on Bloomberg, CNBC, Fox Business Network and other media.
