Excluding energy, Apple (NASDAQ:AAPL) seems to be one of the few names propping this market up. Will it get flushed lower in the coming days and weeks? It’s possible, although AAPL stock has held up best among mega-cap tech stocks. If we should see a flush lower, Apple is one worth buying. Why? There are three reasons: Robust financials with a monumental balance sheet and incredible cash flow, a solid earnings report and an immense buyback.
Apple doesn’t sport a $2.5 trillion market capitalization for nothing. It’s a titan among titans and its financials reflect it. The company has total assets north of $350 billion, with current assets of almost $120 billion. More than $50 billion of that is in cash or equivalents.
Even more impressive is the company’s free cash flow. On a trailing basis, that figure sits at $105 billion. Think about that for a minute. Apple can run a cash flow of $100 billion a year. The growth is impressive, too. Free cash flow stood at $58.9 billion in 2019, $73.3 billion in 2020 and $92.9 billion in 2021.
Further, Apple recently reported strong quarterly results on April 28, with earnings and revenue topping expectations. More specifically, the company beat on both Services and iPhone revenue. Sales of the former grew 17.3%, while the latter breezed past expectations of $47.88 billion after reporting revenue of $50.57 billion.
Apple’s board of directors also authorized $90 billion in share buybacks. This tends to be a bit of a trend for the company, as the company spent $88.3 billion in buybacks last year. Warren Buffett is also a big buyer of Apple at Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B).
He scooped up $600 million worth of AAPL stock in a three-day span before the stock bounced. Buffett said he would have bought more had the stock continued to decline, so one could reason that Berkshire will likely be a buyer of Apple if the stock continues lower.
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Speaking of the price action, the chart for AAPL stock is mixed. It doesn’t look all that good on its own, but it looks down-right attractive when compared to many other holdings.
Now that the 50-week moving average is failing as support, investors should keep an eye on the $150 area. Near this area, AAPL stock will find its first quarter and current 2022 low. If this area fails, it could put the $135 to $140 area in play — a major support/resistance zone.
On the upside, a move back over the 50-week moving average could put the mid-$160s in play.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
