With holiday-shopping season upon us, there are plenty of reasons to like Apple (NASDAQ:AAPL) these days. It’s true that the stock price has been relatively flat as of late, even with the company coming off a solid earnings report. But the rollout of the iPhone 12 featuring 5G technology, combined with Apple’s recent announcement of its new in-house chips that are powering its next wave of laptops, bodes well for AAPL stock.
Apple stock has an “A” rating in my Portfolio Grader and carries a strong buy recommendation. I think it is one of the best stocks you can buy today.
AAPL Stock at a Glance
Apple has had a solid year so far, up more than 64% since Jan. 1. But that growth is slowing down.
Over the last three months, AAPL stock shows a 4.17% increase. And over the last 30 days, Apple is only up 0.31%.
Is it reason for concern? Not really.
Earnings for the fiscal fourth quarter showed revenue at $64.7 billion, versus analysts’ estimates of $63.7 billion. Earnings per share (EPS) came in at 73 cents, which beat the 70 cents per share that was expected.
The biggest red flag was that iPhone revenue was down 20.7% on a year-over-year basis, coming in at $26.44 billion. Analysts had expected $27.93 billion in revenue from iPhones.
Other segments, such as Services ($14.55 billion revenue versus $14.08 billion expected) and Mac revenue ($9 billion revenue versus $7.93 billion expected) helped make up the difference. But it was no matter, as AAPL stock fell immediately after the report.
iPhone Delays
While investors seem to be reacting to the drop in iPhone sales, I’m not worried. You shouldn’t be, either.
Remember, production delays caused by the novel coronavirus meant the iPhone 12 didn’t come out until October this year. So Apple’s fiscal fourth quarter didn’t include any numbers from the iPhone 12 release. Investors won’t see that until Apple reports Q1 2021 earnings.
And I still believe that the iPhone 12 is going to be a big winner. As I mentioned in my Apple earnings preview, preorder sales for the iPhone 12 looked great, and Morgan Stanley is projecting that Apple will sell as many as 240 million iPhones this year.
One thing that will really drive iPhone sales, in my opinion, is the rollout of 5G technology. 5G technology is a game-changer that will be huge for virtual reality and artificial intelligence.
It will allow you to use your smartphone anywhere you are as if you were on a high-speed connection. It truly is one of the most exciting developments for smartphones and should trigger a huge number of sales as people upgrade to get the newest technology.
A Word About Apple’s New Chips
Apple’s “One More Thing” event on Nov. 10 ushered in a new era for Mac computers. Apple finally came through on its promise to break away from Intel (NASDAQ:INTC) chips. Instead, it will use its own Apple silicon and chip architecture from Arm Holdings to make chips to power its Mac computers.
The switch gives Apple more leverage over its supply chain. It improves software and hardware integration and should improve performance for its computers.
That advancement got the attention of analysts like Andrew Uerkwitz of Oppenheimer, who set a price target of $125 on AAPL stock. He says Apple’s in-house chip production will allow developers to increase their reach by providing a seamless software experience on different Apple devices.
The Bottom Line
You don’t often see a company rise 60% year-to-date, beat revenue estimates by $1 billion, beat EPS estimates and still fall in price. That’s how high the bar is for AAPL stock.
Production delays caused by the Covid-19 pandemic mean that the iPhone 12 wasn’t for sale in the most recent quarter. But I’m expecting big numbers in fiscal 2021 as the rollout of 5G technology triggers many iPhone owners to upgrade.
Meanwhile, Apple’s Services segment continues to be a growing dominant force. Services includes high-margin parts of Apple’s business, including the revenue it gets from developers who sell apps on the company’s App Store.
On a quarter-over-quarter basis, Services revenue grew from $13.2 billion to $14.55 billion. As long as that growth continues, Apple will be in great shape.
Couple those factors with Apple’s in-house chips that will improve its lineup of Mac computers and the holiday-shopping season, and you have a lot of good reasons to love AAPL stock right now.
On the date of publication, Louis Navellier did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article had a long position in AAPL. The InvestorPlace Research Staff member did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
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.
