New York
CNN Business
—
Apple’s stock has been a lemon this year. Shares are down more than 10% so far in 2022, and Apple is trading around 15% below the all-time high reached in early January.
But with new iPhones will be unveiled on WednesdayWill expectations for strong holiday sales – and all the subscription revenue that comes with it – be enough to turn Apple’s stock from red to green?
Apple
(AAPL) had some recent momentum. Shares are up more than 7% in the past three months. It should also be noted that Apple
(AAPL) is not doing as badly as the broader market and the rest of FAANG stocks. Investors find comfort in Apple
(AAPL)steady earnings growth and strong balance sheet, even in these tumultuous times.
The S&P500for example, fell nearly 18% this year as Facebook owner MetaplatformsAmazon
(AMZN)netflix
(NFLX) and parent Alphabet from Google
(GOOGL) were particularly affected. Amazon
(AMZN) and Alphabet
(GOOGL) are each down nearly 25% in 2022 while Meta and Netflix
(NFLX) both dipped more than 50%.
Investors seem to be betting that the latest batch of iPhones will lead to strong profit jumps for Apple.
Analysts are forecasting earnings-per-share increases of nearly 9% this fiscal year and about 6% for 2023, respectable returns for a company as large as Apple. The tech giant is expected to generate $392.5 billion in sales this year and Apple is the world’s most valuable company, with a market capitalization of $2.5 trillion.
The company is generating a huge amount of money from a new line of iPhones as existing customers upgrade and some holdouts ditch Android devices. Apple is also raking in big bucks from its lucrative services unit, subscriptions for iCloud, Apple Music, Apple TV+ and other perks for iPhone, iPad and Mac users.
“All the hype around the iPhone 14 upgrade cycle should help Apple in the near term,” said Jordan Kahn, chief investment officer of ACM Funds. Kahn owns Apple in the ACM Dynamic Opportunity fund.
An analyst thinks that more iPhone users than usual will be looking to get a new device after this launch. Indeed, many customers seem to have kept their iPhones for longer periods of time before getting upgrades. (This reporter stubbornly kept his old iPhone 8 Plus, partly out of fear of losing the home button.) The release of new devices may entice these users to finally upgrade.
Wedbush Securities analyst Daniel Ives noted in a report that Apple’s initial order for 90 million iPhone 14 units is about flat with what it ordered for the iPhone. 13, even with “the construction of macro storm clouds”. Apple therefore still expects its devices to sell even if consumer spending slows more broadly.
“It speaks to the underlying demand story that Apple anticipates for this next version of the iPhone with our estimates that 240 million out of 1 billion iPhone users worldwide have not upgraded. been updating their phones for over 3.5 years,” Ives added.
Apple also benefits from the fact that it is a popular stock not only for individual investors but also for Wall Street giants.
According to research by market strategists at Goldman Sachs, Apple was one of the top mutual fund and hedge fund picks at the end of the second quarter, alongside other megacap technology companies, including Amazon, Nvidia.
(NVDA) and Tesla
(TSLA).
Apple is that rare beast, a stock that’s still exciting enough for the growth crowd, but also attractive to value investors thanks to its reasonable price, penchant for stock buybacks to boost earnings and a constantly increasing dividend.