It looks as if investors have very little to worry about when it comes to Apple (NASDAQ:AAPL) stock these days. Despite the novel coronavirus pandemic, Apple stock is proving to be just as resilient — and relevant — as ever.
Apple is coming off its fiscal second-quarter earnings report in which it once again exceeded analysts’ expectations, which is no small feat while the global economy is in a coronavirus-induced downturn.
And now, as Tim Cook’s company is preparing a series of rollouts that will breathe fresh air into Apple’s coffers, I think the future is even brighter for this $1.2 trillion company.
Apple at a Glance
These days, Apple stock trades close to $290 per share — a huge jump considering it opened 2019 at less than $155 per share. Year to date, the stock is roughly at breakeven, but is slowly climbing back to all-time high levels achieved in February.
Fiscal second-quarter results released April 30 had Apple with revenue of $58.31 billion and adjusted earnings per share of $2.55. That beat analysts’ expectations for revenue of $54.64 billion and EPS of $2.26. But it was below the company’s initial projection of $63 billion to $67 billion, made before the coronavirus pandemic.
Diving deeper into the report, the company reported that iPhone revenue declined by 7% year-over-year to $29 billion, which the company attributed to the coronavirus pandemic affecting both supply and demand.
“Despite Covid-19’s unprecedented global impact, we’re proud to report that Apple grew for the quarter, driven by an all-time record in Services and a quarterly record for Wearables,” Cook said.
Apple says it earned $13.3 billion in its Services segment, which is up 16% from a year ago. The Services segment is extremely important for Apple because it represents high-margin business. The company charges fees to content developers who are selling products on Apple’s platform, giving Apple a bigger profit margin than it enjoys from entertainment or iPhones.
Innovation Will Push Apple Stock Higher
I told you on April 15 that I thought Apple stock already hit a bottom, and now I’m even more so convinced that the company is headed to new highs. And one reason I’m bullish is the trickle of information coming out about Apple’s new product line.
While we’re not yet sure if the coronavirus will slow down its development, Apple is scheduled to release its latest iPhone iteration later this year. The iPhone 12 will be a 5G smartphone, which is game-changing technology all on its own.
But to cap that off, the new iPhone appears to include its biggest design change since the iPhone X was released in 2017. PhoneArena put together a design rendering of the new iPhone, and if the final result is as dramatic as it appears, iPhone sales will likely soar.
People need a reason to spend $1,000 on an upgraded smartphone, and while Apple has its devotees, the more change that Apple can make to set the new models apart, the better chance they have of convincing people to upgrade.
Apple is also working on a new iteration of its smartwatch, the Apple Watch 6. There have been a number of leaks about the new watch, but what’s most interesting is that the watch will include a sleep tracker and a way to monitor your heartbeat — to make sure its wearers don’t get too stressed out.
Finally, I’m also interested in Apple’s recent announcement, along with Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) that it’s adding security features designed to tell you if you’ve been in contact with anyone who has the Covid-19 disease.
The update would be available to users by the end of the year and users would have to opt-in to activate it. But if scientists are correct that we may be dealing with the coronavirus for months down the road, then something like this could be very beneficial.
The Bottom Line on Apple
The most important thing for a big company like Apple is to keep innovating and keep finding ways to be indispensable to its customers. And Apple seems to be on the way to doing that, with an impressive product list, growing divisions and a concerted effort to help improve its customers’ health.
Apple stock has an ‘A’ rating in my Portfolio Grader tool right now.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.