Apple’s recent record results are encouraging and the company’s consumer demographics suggest that it could be resilient, even amid inflation. Plus, a very strong profit margin gives the company plenty of flexibility to absorb rising prices should the need arise.
David Jagielski, The Motley Fool:
This resilience in the business demonstrates the brand loyalty the company enjoys and why it could continue to do well next year, even if inflation doesn’t go away. If not for the impact of foreign exchange, the company’s growth rate last quarter (for the period ending Sept. 24) would have been in the double digits.
Investors should always focus on free cash flow. That can tell investors how safe a dividend is and how likely it is that a company can afford to buy back shares (which has a bullish impact on the stock) or pursue growth opportunities. In Apple’s case, free cash flow has been stellar.
Apple also rakes in some terrific profits, with its net margin normally at 20% or better of revenue. Margins like these give the company the flexibility to battle inflation and absorb the impact of higher costs without necessarily passing that off to customers in the way of price increases.
Investors may want to consider buying the stock on the dip because, with respect to earnings, Apple is trading right around its five-year average, which may be a deal for this top growth stock.
MacDailyNews Take: Yup.
Apple’s customers are simply the cream of the crop:
Apple iPhone customers are the most recession-proof smartphone buyers. — MacDailyNews, September 7, 2022
The same goes for Mac, iPad, Apple Watch, and Apple Services customers in personal computers, tablet computers, smartwatches, and subscriptions, respectively. – MacDailyNews, October 13, 2022
The most inflation- and recession-resistant big tech company is Apple, thanks to its superior customer demographics. – MacDailyNews, October 27, 2022
When your money becomes a greater concern, you want to spend it wisely. In China and everywhere, if it’s not an iPhone, it’s not an iPhone. Further, if it’s not an iPhone Pro, it’s not an iPhone Pro. – MacDailyNews, October 27, 2022
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[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]
Apple has proven itself profitable in good times and bad. Money may leave stocks (in general) with progressively higher rates, but what remains will flow toward AAPL. AAPL has become a safe and reliable bet.