Giant of consumer electronics Apple (AAPL) has seen its shares fall this year on concerns about weakening macroeconomic conditions, slowing growth and supply constraints. But with the pullback in Apple stock, many investors are wondering if AAPL stock is a bargain right now.
Apple Stock News: Sell iPhone 14
On September 7, Apple introduced its third generation of 5G smartphones, the iPhone 14 series. It also debuted its Apple Watch Series 8 smartwatches and second-generation AirPods Pro wireless earbuds. Apple shares rose 0.9% on the news.
Analysts praised the innovative new devices, but some feared that the premium products would be a hard sell in the current economic climate.
Demand for the high-end iPhone 14 Pro models was strong, while sales of the regular models were disappointing.
Apple rounded out its holiday lineup on Oct. 18 with new iPads and an improved Apple TV streaming video box. AAPL shares rose 0.9% that day.
On November 6, Apple warned that an outbreak of Covid at a factory in China will limit availability of iPhone 14 Pro and Pro Max handsets this holiday season. The factory, owned by Foxconn, is “running at significantly reduced capacity” due to Covid restrictions, Apple said. The factory later saw worker protests that, according to news reports, turned violent.
Wall Street analysts have slashed their iPhone sales forecasts for the December quarter due to a shortage of handsets related to the manufacturing problems.
Apple Opportunities for growth
As the iPhone business matures, investors are wondering what the next big growth engine for Apple stock will be.
Recently, two companies have boosted Apple’s sales and profits: services and wearables.
However, analysts are concerned about the slowdown in Apple’s services business growth lately.
In the September quarter, Apple’s services revenue grew only 5% year over year to $19.2 billion. Services include the App Store, AppleCare, iCloud, Apple Pay, Apple Music, Apple TV+, Apple Arcade, and other offerings.
At the end of October, Apple raised the prices for its Apple Music and Apple TV+ services for the first time. It also increased the price for its Apple One service bundle.
Meanwhile, Apple faces antitrust scrutiny in the US, Europe and Asia over its App Store policies, including the 30% commission.
Rumors about Apple products persist
Apple’s Wearables, Home and Accessories division saw sales increase 10% in the September quarter to $9.7 billion. This device includes wearables such as the Apple Watch, AirPods wireless earbuds, and Beats headphones. It also includes the Apple HomePod Mini wireless speaker and other miscellaneous gadgets.
News leaks suggest that Apple will announce a virtual reality and augmented reality headset in 2023. The computer headset could boost Apple stock, analysts say.
Meanwhile, speculation continues that Apple is looking for a self-driving electric car.
Apple Earnings: Solid Beat
Late on Oct. 27, Apple beat Wall Street’s fiscal fourth quarter targets on the back of strong iPhone and Mac computer sales. Apple shares rose 7.6% in the next trading session.
Apple earned $1.29 per share on revenue of $90.1 billion in the quarter ended Sept. 24. Analysts polled by FactSet expected Apple to earn $1.27 per share on revenue of $88.7 billion. Year-over-year, Apple’s revenues were up 4%, while revenues were up 8%.
However, Apple warned that it expects slower sales growth in the holiday quarter.
In the September quarter, Apple’s iPhone sales increased 10% to $42.6 billion. Smartphones accounted for 47% of the company’s total sales during that period.
Meanwhile, Apple’s Mac sales rose 25% to $11.5 billion.
Apple’s iPad unit was the only product category to show sales decline in the quarter. iPad sales fell 13% to $7.2 billion in the fiscal fourth quarter.
The company’s next earnings report won’t be out until the end of January.
Apple Stock pulls back from high
During intraday trading on Jan. 3, Apple briefly reached a $3 trillion market cap when shares hit 182.86. Apple stock climbed to 182.88 that day before pulling back. It was the first company to reach a market cap of $3 trillion.
On January 4, Apple stock once again hit the $3 trillion mark. It reached an all-time high of 182.94 before pulling out. AAPL stock fell in the weeks that followed, but has since tried to recover several times.
The storied history of Apple
Apple has been an American success story several times. First, it sparked the personal computer revolution in the 1970s with the Apple II. Then, in the 1980s, it reinvented the PC with the Macintosh.
Co-founder Steve Jobs returned to lead Apple in 1997 and oversaw a range of innovations, including the iMac, iPod, iTunes, iPhone, iPad, and the App Store.
The biggest driver of Apple’s modern success is the iPhone. The groundbreaking smartphone, which debuted in 2007, fueled years of tremendous growth and created a loyal base of customers willing to buy Apple products and services.
Also, Apple is #5 on IBD’s 2022 100 Best ESG Companies list. ESG stands for environment, social and governance.
Exclusive Apple Stock Ratings
After hitting its all-time high in early 2022, Apple stock retreated as much as 29%.
AAPL stocks have an IBD Relative Strength Rating of 34 out of 99. The Relative Strength Rating shows how a stock’s price performance compares to all other stocks over the past 52 weeks.
Apple stock has an IBD Composite Rating of 67 out of 99, according to the IBD Stock Checkup tool. IBD’s Composite Rating combines five separate proprietary assessments of fundamental and technical performance into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
AAPL Stock Technical Analysis
Over the past 50 weeks, AAPL stock has consolidated with a buy point of 183.04, according to IBD MarketSmith charts. It ended the regular session on December 16 at 134.51.
In a negative sign, Apple shares traded below the 50-day moving average line, as well as the 200-day line. Also, the relative strength line has declined as it underperforms the S&P 500.
Apple shares have an IBD Accumulation/Distribution Rating of C-, indicating modest institutional share sales.
Is Apple Stock a Bargain Now?
Apple stock is currently not a buy. It is trading well below its official buy point.
Keep an eye on the general stock market. If the market turns south, try not to go against the general direction of the stock market. Check out IBD’s Big Picture column for current market direction.
To find the best stocks to buy and view, visit the IBD stock listings page. More stock ideas can be found on IBD’s Leaderboard, MarketSmith, and SwingTrader platforms.
Follow Patrick Seitz on Twitter @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
YOU MAY ALSO LIKE:
Is Microsoft Stock Now a Bargain? This is what IBD charts show
Is AMD stock a buy now?
Find attractive growth stocks with the IBD stocks of the day
Catch the next big winning stock with MarketSmith
Get inventory ideas from IBD experts each morning before opening