The pace of the novel coronavirus’s spread has kept some investors from taking a chance on Apple (NASDAQ:AAPL). That’s a shame, because their pros outweigh the cons. Apple stock should continue to deliver revenue growth as well as new technologies to consumers.
By the time most analysts and traders feel good about Apple stock again, the price will be back to its all-time high and won’t be as much of a bargain. It could still be worth buying at that point, but forward-thinking investors should stay ahead of the crowd and consider the factors that weigh in Apple’s favor.
The Signs of a Bottom
The Apple stock price was battered in March but has shown signs of a bottoming process. In an efficient market, all of the known data is already priced in and that includes slowing iPhone sales as well as store and factory closures.
As you may already know, Apple has reopened its retail stores and resumed iPhone manufacturing in China. Therefore Apple’s ability to supply its popular phones remains intact. And once the stores outside of China reopen, traders will start bidding up the Apple share price very quickly.
Deutsche Bank raised its rating on Apple stock to a “buy” on March 25, another sign of a bottoming process. Another example is Instinet analyst Jeffrey Kvaal, who increased his price objective for Apple shares from $225 to $240.
Slowly but surely, you’ll start to see more and more analysts warm up to Apple again. But don’t wait for every last analyst to assign a positive rating. The most profitable investors think for themselves and look to the future.
New iPhones Will Be Affordable
Great companies are able to pivot their strategies when the situation calls for it. Apple has demonstrated the ability to adapt to changing consumer trends over the decades.
Now, with the coronavirus pandemic impacting people’s ability and/or willingness to buy $1,000+ phones, Apple is shifting to more affordable iPhones for the public. That’s a smart move as KeyBank found that iPhone buyers are now leaning towards the less expensive models.
The new line of low-priced iPhones are expected to bear a familiar name: iPhone SE. Apple aficionados will recall that name because the original iPhone SE line was launched in 2016 but was discontinued in 2018.
That version of the iPhone SE sold for $399. Perhaps it’s not a coincidence, then, that Apple analyst Ming-Chi Kuo is predicting a $399 price tag for the basic version of the 2020 iPhone SE.
The original iteration of the iPhone SE was successful, so Apple has already demonstrated an ability to market to budget-conscious shoppers while supplying high-quality phones at any price point. Investors should keep this in mind as America isn’t the only target market. China and India, where price sensitivity is a factor among consumers, will be prime target markets for Apple’s more affordable devices.
Buyers will still expect Apple’s low-cost phones to have robust features. The company will undoubtedly deliver in this area, as it has done in the past.
Rumors of the iPhone SE including a A13 Bionic system-on-chip, a Touch ID fingerprint sensor, and a 4.7-inch LCD display cannot be confirmed at the moment. However, 5G connectivity is likely and Apple is known for providing the features that consumers want, so an optimistic outlook is warranted.
The Final Word on Apple Stock
The bottoming process for Apple stock involves a turnaround in investor sentiment. This process is already under way as Apple is keeping its supply chain running and delivering products where it can. And with a line of budget-priced iPhones on the way, Apple is once again cementing its status as a savvy, world-class tech leader.
Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
