You may have heard this one before: Cash is now king. And on that score, tech stocks like Apple are far better positioned than any other sector.
For investors looking to jump back into the market, this is a rare opportunity to buy tech’s Big Five — Alphabet, Amazon.com, Apple, Microsoft, and Facebook — on the cheap. The virus issue affects them all, but each company is likely to come through the downturn with its business intact.
All five companies have sparkling balance sheets. Together, they have $587 billion in cash against just $200 billion in long-term debt. Apple has the biggest pile of total cash, with $207 billion at year end, against $108 billion in borrowings.
Steve Milunovich, a Wolfe Research strategist who has covered tech since the 1980s, says he’s still feeling confident about the big-cap tech names… Milunovich thinks governments may take a looser approach to tech regulation coming out of the downturn than has been the case in recent quarters, as the focus shifts toward restoring growth.
The supply chain in China is improving, with contract manufacturer Foxconn’s factories coming back on-line. Apple has reopened all 42 of its stores in China. Granted, the company has now closed the rest of its stores worldwide. The slightly good news is that the March and June quarters are slower times for Apple, and stores could reopen in time for the iPhone 5G launch expected this fall. Meanwhile, Apple has spent the past several years bolstering its services business. Music, streaming, and app purchases could get a boost with consumers stuck at home.
MacDailyNews Take: Of course, the question of where the bottom is in every buyer’s mind, but five or ten years out, after we’re past this pandemic, exactly how well you timed the low won’t matter much at all.