Apple (NASDAQ:AAPL) stock hasn’t had a great 2022 but it isn’t alone.
It’s no secret that the tech sector has been pummeled. Apple stock has fallen more than 24% year to date.
That isn’t much better than the S&P 500 IT Index which has fallen more than 27% YTD.
Still, there are several reasons to believe that Apple will outperform in whatever environment the economy heads into next. Yes, there are risks, but among tech stocks, Apple is the cream of the crop.
A Closer Look at AAPL Stock
Much of the reason that the tech sector has been pummeled so badly is its inherent instability. When quantitative policy is eased, which coincides with good times, tech performs well generally.
Tech companies can grow their revenues in such times because there’s a lot of money sloshing around in the economy. That’s true of most tech companies whether they’re profitable, like Apple, or not, as are many tech companies.
Now that quantitative policy is quickly tightening, tech is plummeting. But that’s why Apple should be a tech stock that investors purchase: It is massively profitable and inherently stable.
The company’s balance sheet ensures that is the case. However you slice it, Apple’s balance sheet looks very healthy. The company has $350.7 billion in total assets balanced by $283.3 billion in total liabilities.
Equally important, Apple counted $51.5 billion in cash and securities in its most recent earnings report.
Apple can maneuver much better than its competitors because its fundamental strengths are so substantial. It is a tech company in name, but fundamentally it bears few of the negative hallmarks of tech.
A Strong Dividend
Investors are increasingly interested in dividend-bearing stocks for their stability and income as inflation continues to run rampant.
Apple’s dividend yield is a low 0.67% but the good news is that Apple has been growing that dividend at a rate of 9.5% over the past five years.
Long story short, Apple exhibits many factors that suggest it will remain strong in the toughest times. That said, investors should be aware of the bearish sentiment around AAPL stock currently.
The Bottom Line
Pundits expect Apple’s Q2 revenues to be flat owing to the lockdown in China. However, they expect that growth will return after that for the remainder of 2022 and throughout 2023. That is, of course, a strong testament to the firm and its stock.
But there is other news to be aware of also. Morgan Stanley (NYSE:MS) released a survey stating that 55% of high-income respondents expect to reduce spending on electronics in the coming six months because of inflation. That kind of slowdown certainly could hurt APPL stock.
Nonetheless, Apple remains the best of the best in tech and it isn’t a stretch to call it the best stock period. As long as it remains the number one stock in Warren Buffett’s portfolio I see no reason to avoid it now.
On the date of publication, Alex Sirois 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.