Apple Inc. (AAPL) looks to be the epitome of the March simile, ‘in like a lion, out like a lamb.” At least, it’s epitomizing the first part of that statement.
Up to this point, Apple stock has had a tough 12 months, losing 22%. First it was the announcement that the company was cutting January-March production of iPhone 6s/6s Plus models so it could get rid of inventory.
That sent shudders through the markets since it meant that the iPhone 6s wasn’t flying off the shelves as expected.
Then, China’s woes in January were also a problem for AAPL, since its most dynamic growth is in the country and a continuing weak China, as well as weak Europe, meant there were no real opportunities to grow.
Looking forward, the uncertainties that are bothering the market now are the strong dollar, which hurts sales outside the U.S., and the relatively weak sales of the iPhone 6s. The concern is whether we’re reaching market saturation and whether Apple can make them compelling to new customers while motivating current owners to upgrade.
Some of this has lead to some hand wringing in the analyst community, particularly since Benzinga claims it has an SMBC Nikko report and its concerns with Apple stock moving forward. This has been stirring up a lot of chatter, and not in a good way.
What This Means for Apple Stock
But this is also a great opportunity. We have one of the markets’ most dominant companies selling at a price-earnings of 10 right now. Apple Inc. is not going out of business. The new iPhone 7 models are now creating buzz, including a new two-lens camera, faster processor and thinner frame as well as other features that haven’t been announced yet.
There is also talk of the AAPL lowering the prices of the iPhone 5s significantly as it announces a new iPhone SE model, which will be an essentially lower-priced iPhone 6 in a smaller form factor.
Apple’s efforts to broaden its base by going after more price sensitive consumers — starting with its payment plans last year — could be a big factor in new sales.
And any improvement in the global economy will also turn some of the current headwinds into tailwinds.
What’s more, the stock has a rock-solid 2% dividend currently, which you can consider payment for your patience, while the stock and the company come around.
Richard Band’s Profitable Investing advisory service helps retirement savers outperform the market without losing a minute of sleep along the way. His straightforward style and low-risk value approach has won seven Best Financial Advisory awards from the Newsletter and Electronic Publishers Foundation.
