For those wondering if Apple stock is a buy right now, the company is enjoying healthy iPhone demand even as the broader smartphone market declines. Harsh Chauhan writes for The Motley Fool that 5G smartphones should be a long-term catalyst for Apple, given its market position.
Harsh Chauhan for The Motley Fool:
The technology giant’s revenue and earnings beat Wall Street’s estimates despite what Apple’s CFO termed “a challenging and volatile macroeconomic backdrop.” The company’s revenue was up 8% year over year to $90.1 billion, while adjusted earnings increased 4% to $1.29 per share. Analysts would have settled for $1.27 per share in earnings on $88.7 billion in revenue, but the healthy demand for iPhones, MacBooks, and wearable devices, along with the growth in Apple’s services business, helped it post stronger results.
According to Strategy Analytics, global smartphone shipments were down 9% year over year in the third quarter to 297 million units. Apple, however, bucked the trend and sold 49 million iPhones during the quarter, an increase of 6% over the prior-year period.
Apple’s sales increased at a time when its key competitors saw their shipments decline. Samsung’s shipments were down 7% year over year. Chinese smartphone OEMs (original equipment manufacturers) such as Xiaomi, Oppo, and Vivo saw their shipments drop 8%, 20.1%, and 20.5%, respectively.
Apple was the leading 5G smartphone OEM last year with a 31% market share. A similar share in 2022 means that Apple could end up shipping just over 213 million smartphones, based on this year’s estimated 5G smartphone shipment forecast of 688 million. As Apple is expected to build 220 million iPhones this year, it could hit that mark as it has a comprehensive 5G smartphone lineup, including the entry-level iPhone SE.
With Apple trading at 25 times trailing earnings and 6 times sales right now, buying the stock looks like a good idea as these multiples suggest a discount to last year’s earnings multiple of 31 and sales multiple of 8. The robust demand for the company’s iPhones and its foray into emerging areas such as headsets and even self-driving cars could make Apple a top tech stock in the long run, which is why investors may want to capitalize on its 12% decline in 2022.
MacDailyNews Take: Trying to time the market is often a tall order, but a regular plan to accumulate shares of the world’s most valuable company over time will — barring a giant asteroid hit to the planet, alien invasion, zombies, etc. — very likely pay off for investors in the long run.
Please help support MacDailyNews. Click or tap here to support our independent tech blog. Thank you!
Shop The Apple Store at Amazon.
“The cyclicals-to-defensives ratio has yet to really react even to the slowdown in the economy we have already seen over the past year or so as indicated by the reversal in the ISM Manufacturing PMI. If the latter continues to deteriorate in the months ahead, cyclicals (like the tech and consumer discretionary sectors) could have a great deal of pain still in front of them.”
https://thefelderreport.com/2022/11/02/equity-investors-are-betting-heavily-on-a-soft-landing-for-the-economy/
While AAPL is a very solid and worthy company, those advocating “buys” as such a time are either prescient, courageous, or writing to fulfill their job responsibilities. This is not to say it’s not a buy, but if one hopes to maximize returns, it’s QUITE easy to conclude this may not be the best time, UNLESS one is a trader. If a long-term investor, it’s quite reasonable to conclude better entry prices are likely. Another rate hike is likely in Dec and many are still anticipating the recession to be real in ’23.
In addition, “broad hiring freezes and slashing budgets” isn’t what people typically note as bullish.
https://9to5mac.com/2022/11/02/apple-hiring-freeze-budgets-report/
Apple is a buy IF China behaves after getting kicked in the ssss by Biden’s new legislation restricting China’s access to chips and the equipment and expertise to make them. Apple still is heavily reliant on assembly in China for most of its products. Xi has made way too many irrational decisions to assume that he won’t get petty about allowing those chips to enter the country without some benefit. All this will be made catastrophic if Xi makes a move on Taiwan. Draconian sanctions will likely follow. I hope Cook is accelerating the shifting of assembly to other locales with great urgency.