- Apple stock is down nearly 13% year-to-date, presenting a buying opportunity.
- Apple’s most recent quarterly results were typically strong, with revenue up 9% from a year ago.
- The company’s board of directors has approved $90 billion in stock buybacks this year.
Shares of consumer electronics giant Apple (NASDAQ:AAPL) have not been immune to the current selloff in tech stocks, presenting a great buy the dip opportunity for investors.
So far in 2022, AAPL stock has come down nearly 13% to now trade in a range between $150 and $160. The iPhone maker’s share price has been jostled as the broader stock market continues to experience extreme volatility and is below its 52-week high of $182.94 reached on Jan. 3 of this year. But rather than sweat the current downturn in AAPL stock, investors should view it as an opportunity to buy shares of a leading technology company at bargain prices. Famed investor Warren Buffett said as much at the recent annual meeting of his holding company Berkshire Hathaway (NYSE:BRK-B).
| AAPL | Apple Inc. | $154.51 |
Follow Buffett’s Lead
On Apr. 30, Buffett disclosed that he has been buying more AAPL stock as the price has fallen this year. Specifically, the Oracle of Omaha, as Buffett is known, said he bought $600 million worth of Apple shares in this year’s first quarter. The maker of iPads and Mac computers now accounts for nearly half, or 40%, of Berkshire Hathaway’s entire stock portfolio that is valued at more than $350 billion. “Unfortunately [AAPL] stock went back up, so I stopped,” said 91-year-old Buffett at the Berkshire annual meeting. “Otherwise who knows how much we would have bought?”
Buffett, who only started acquiring AAPL stock in 2016, has been effusive in his praise of the company founded by Steve Jobs that is today run by chief executive officer (CEO) Tim Cook. He calls Apple one of Berkshire Hathaway’s four giant investments and the second-most important holding after the insurance companies he owns. “Tim Cook, Apple’s brilliant CEO, quite properly regards users of Apple products as his first love, but all of his other constituencies benefit from Tim’s managerial touch as well,” Buffett wrote to Berkshire shareholders in his most recent annual letter.
Some Issues for AAPL Stock
Despite Warren Buffett’s high praise of Apple’s management team and his clear love for the stock, the Cupertino, California-based company has been grappling with some ongoing issues over the last six months. These include ongoing supply chain problems, inflation that is pressuring consumers, and new Covid-19 lockdowns in China that have hurt the company’s overseas sales and manufacturing. AAPL stock fell about 2% after its most recent earnings print when the company warned that ongoing supply constraints could cost it $8 billion in lost revenue this year.
While the supply chain problems are expected to be temporary, the negative outlook overshadowed what was otherwise a strong fiscal second quarter. Apple reported that its revenue grew nearly 9% year-over-year in the quarter ended Mar. 31 to $97.28 billion versus $93.89 billion that was expected on Wall Street. Earnings per share was $1.52 compared to $1.43 that had been expected among analysts. All business units reported annual increases. However, the company warned that demand in China is being hurt by renewed Covid-19 lockdowns, which has also hampered production of some products.
The outlook obscured what was a solid print from Apple. It also caused many investors to overlook that Apple’s board of directors has authorized $90 billion worth of share buybacks this year. Apple continues to be the U.S. public company that spends the most buying back its own shares, a move that creates additional value for shareholders. In 2021, Apple bought back $88.3 billion of its own stock.
Buy AAPL Stock While its on Sale
Supply chain snarls and China’s zero tolerance Covid-19 policy aside, Apple remains one of the best technology stocks that any investor can own. In the last five years, through all the turmoil and strife, Apple’s shares have gained 255%. Additional value has been provided to investors through share buybacks and a stock split that was executed in August 2020. The current issues that Apple is wrestling with are temporary, not within its control, and not unique to the company. Long-term, Apple will be just fine and is certain to continue rewarding shareholders. AAPL stock is a strong buy. Get shares while they’re discounted.
On the date of publication, Joel Baglole held a long position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
