Are Apple shares appearing as a new long-term contract? Concerned neo-hippies and their global warming, i’ll tell ya. So it seems. Om Friday, Nov. 26, with the S&P 500 nearing 5% from its all-time high and the most painful since Covid fears re-launched the stock market – and the heavy-duty Nasdaq Composite is down 6%, with roughly 2% last Friday alone – the maker of the iPhone and the valuable US company dominated more than the turmoil.
It rose 3.5% last week, rising even on some days when most of the technology was dead, with other mega-cap names such as Netflix and Amazon thriving during the original launch of the Covid pandemic last year. For the past month, Apple’s return of 5.6% is slightly better than the 1.17% posted by BlackRock’s flagship US Government Bond ETF.
“At this time of risk, buying $ AAPL = raising money,” financial blogger and financial manager Mark Dow tweeted, summed up the market sentiment.
But is that wise?
Yes and no.
The case of the bear on Apple, for now, is pretty easy to explain. Not to be outdone by the massive decline of the market in 2020, falling again during the Delta crisis last year. And for what it’s worth, at the start of the iPhone era, Apple shares lost more than half their value after the September 2008 crash of Lehman Bros.
Low-risk real estate as government bonds will rarely have such movements as the economy goes. The ETF Bond has been doing well, with iShares prices rising in the last two years, but falling 1.34% this year so far, as investors estimate the value of the bonds sold at low interest rates will fall as rates rise in economic growth.
And Apple has had its own wobbles based on its specific business outlook, especially when signs of weakness came from Asia, as happened in 2015. Back then, Apple shares lost a quarter of their value from the top to the trough, but make it back. early 2017 and more than quadrupled from there, a surge that has hit homes worth $ 2.62 trillion as of Friday afternoon.
The company has been hit hard by the supply chain challenges facing technology companies relying on Asian manufacturers and Asian semiconductors, said Scott Kessler, global technology media and telecom automation company. Third Bridge Group consultation. Apple said on its latest acquisition call that supply chain issues accounted for about $ 6 billion in iPhone sales.
Last week, a report said the holiday demand for the iPhone 13 was not as high as predicting the printing of Apple shares.
“My understanding is that it will be at least as important as [it was] in the last quarter, ”Kessler said.
But these are unusual times, and Apple is a beautiful treasure trove.
As always, the discussion of Apple’s finances begins with its financial reserves. Analysts put them at about $ 62 billion, up from more than $ 81 billion a year ago. Apple has a slightly better price than it once did, declining by stock purchases, but still, according to Wedbush Security analyst Dan Ives, enough to run a small country. Apple also has another $ 127.9 billion in water security.
Then there is the regular cash flow of our company, which is currently operating at about $ 100 billion a year. Nearly a quarter of sales now come from trading in Apple services, which is twice as profitable as applications such as iPhones and Macbook personal computers before accounting for company costs and sales costs, leading to to expectations that payments would be at least $ 100 billion a year for the next decade, and that it is likely to rise, said CFRA Research Analyst Angelo Zino.
“The reliability of the product is a normal view of the products found in the pipeline,” Zino said. “It is a big company. It is a high-end dream business in iPhones and iPads, with products that are second to none. Development drivers for the next three years are in the works, and the Apple Car is there. ”
Because high-end service businesses, particularly online, order higher product prices than non-profit appliances, the change in Apple’s mix has helped boost its cost-effectiveness significantly. rose to 28 times expected earnings for its fiscal year, which ended in September.
Put those two factors together and more product purchases are expected. Indeed, Apple has allowed dividends on its shares to drop by just over half 1% – less than even the two-year Treasury now pays – to make room for more purchases, Zino said. The advice is simple: That taking a large share of Apple payments from a small share is a better deal than a close close to the S&P 500 average of 1.3%.
“We are also able to return $ 24 billion to shareholders during the September quarter,” Apple chief financial officer Luca Maestri told analysts in October. “That includes $ 3.6 billion in shares and equivalent and $ 20 billion through open market redemptions of 137 million shares of Apple.”
Apple received its latest bullish call from the market on Monday with a buy rating from KeyBanc, which referred to the services market and Apple as the best bet for a return on investment among mega-cap technology partners despite its cost high in relation to history.
Confidence in Apple is also boosted by a favorable reception for the new release of the iPhone, iPad and other products, and the expectation that the new Apple watches will sell well. Ives predicts Apple will sell 40 million iPhones over the holiday season.
“Evaluation is not important,” Ives said. “We think Apple will be the $ 3 trillion cap cap company in the first half of 2022.”
The threat is a global one, or at least one US one, a feature that Apple’s history has faced from China six years ago. At the time, Asia’s demand for iPhones dropped amid market concerns that system development was slowing down in Asia and its close business partners, bringing shares down with them. The incident shows Apple is a consumer control company, subject to the risk if customers are large enough to reduce costs.
No one knows whether the omicron will repeat that pattern, but Zino argues that each successful wave of Covid attacks has hurt markets less than it did in the winter and early 2000s, and that stocks are back. quickly to even that, thanks to strong domestic confidence in the economy.
That, by the way, builds the assumption after turning the Apple star as a safe haven: the assumption that, if it falls, investors will eventually get their money’s worth, while bonds, Apple’s competition for a safe haven, see their charges. erode as rates for newly-traded paper go up.
“I would rather be a big fan of technology than in bonds, given where our contract harvests are and where they hope to go,” said Zino, who, like Ives, is in charge of purchasing Apple shares. “Disasters in the last system of speech for two quarters anyway.”
To support its pricing, Apple needs to do more than just do existing business and get a fair share of 250 million people with iPhones over three and a half years, Ives said. The service market is still growing, and the product is very confident that Apple Car – a project that is being shut down again and again in terms of exciting product, while the company has said little about its intentions – it is possible to go on sale. by about 2025, probably in partnership with the existing carmaker, Ives said.
“It is a renewal of development in Cupertino,” Ives argued. “They have been working on the automobile for many years, and they will not lose out on the $ 5 trillion green wave over the next 10 years.”