Some stocks are continuously in the news cycle, which is a reflection of the current media landscape as much as the relevance of those picks. I probably don’t have to list out the names for you, but big-time companies such as Tesla (TSLA), Amazon (AMZN), Facebook (FB), Twitter (TWTR) and Apple (AAPL) are a few obvious examples.
As investors in these companies, or general followers of the stock market, it’s fine to stay tuned into this news cycle to keep a pulse on sentiment and big-time announcements. But, it’s important to remember that quick headlines often have little impact on a company’s fundamentals.
With the fall release and third-quarter earnings in the books, Apple headlines have gotten far more specific — and arguably irrelevant. The latest: “Credit Suisse: Apple cutting iPhone production orders 10%.”
While production orders affect and/or reflect Apple’s fundamentals, the reality is that fundamentals don’t shift as rapidly as headlines and the quick-hit news cycle make it seem. This is obvious when we remember that many investments have a time horizon of decades — somethings that’s easy to forget in the wake of day-to-day chatter and panic.
The Real Deal for Apple Stock
With Apple, an order reduction is a worrisome statistic — an investor would rather see off-the-charts demand. But, it’s hardly the end of the world. Every business comes with ups and downs, and this tech behemoth is no exception.
Of course, the negative headline will still get retweeted and quoted — and that will happen with many folks not bothering to read the full assessment. The raw numbers: Credit Suisse said Apple has cut 10% of its component orders, which seems to be driven by weak demand for the iPhone 6S. The company lowered iPhone estimates for 2016 by 20 million to a new estimate of 222 million.
But, there’s one important caveat, as reported by CNBC: “However, the bank is not recommending investors sell the stock, but rather ‘buy any dips.’ ”
This is what we’ve been saying about Apple stock all along as a result of more fundamental, substantial statistics.
Take Sensational Headlines With a Grain of Salt
Right before the company’s event in September, I noted that, even with growth concerns considered, Apple stock looked like a long-term bargain. I urged readers to not discount the possibility that AAPL could end the year back above $130, maybe even $140. I pointed to a few factors, including the fact that Apple’s presence and sales in China were strong, despite concerns about the country’s growth. I stand by that assessment.
Even after Apple’s September event failed to spark a rally, I remained optimistic and offered the same call that Credit Suisse just did: Use any sell-offs as a buying opportunity. AAPL still pays a nice dividend, has strong profit margins, is slated for strong growth, and is beating the market so far this year. I wrote:
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.
The good news? Investors didn’t panic and run for the exits as a result of this one-off headline.
The bad news? Ditto. Because if some folks had overreacted (as they often do), you can bet savvy investors would have jumped on that opportunity and snatched up some discounted Apple stock.
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.
