It goes without saying that sentiment has shifted in a big way with shares in Apple (NASDAQ:AAPL). In the exact same way it has shifted for the other FAANG stocks. Like with the other FAANG names, AAPL stock has taken a dive so far in 2022. Since January, it’s down nearly 20%.
The rout in tech stocks has, of course, been a big reason for this. With rising interest rates, and rising recession fears, the market has gone from very bullish, to very bearish, on growth/tech stocks. If that’s not bad enough, the tech giant has had to contend with many company-specific headwinds.
However, don’t assume that the party’s over for this stock. Things could remain difficult in the near-term. It may take time for sentiment to improve. Still, as it finds itself out of favor, now may be the time to buy.
AAPL Stock: Today’s Issues Do Not Permanently Change the Story
It’s not only been the end of the pandemic-era runaway bull market that’s put pressure on Apple shares. Many negative developments have also had an impact. For example, the production pauses caused by the spring pandemic outbreak in China.
Also, the uncertainty as to whether the company can release its latest big product (the iPhone 14) on schedule (this September), or if due to production/supply chain issues, will have to delay its release. As I mentioned last month, when I last wrote about AAPL stock, labor issues have also weighed on shares.
Workers at one of its retail stores successfully unionized. Some may see this as the start of a unionization wave among Apple store workers – and a subsequent surge in its retail labor costs. Add in the aforementioned rising concerns about a recession atop these issues, and it’s easy to see why the market has lost confidence in this winning company staying a winner.
However, is the market completely on the mark when it comes to its current view? Not necessarily. It’s possible they’re making mountains out of molehills. Apple may be experiencing challenges right now, but it’s premature to say the story has permanently changed.
Apple’s Current Hiccups Will Pass
Investors may not necessarily believe it’s “game over” for AAPL stock, yet they may believe its days of stellar performance may be behind it. That is, from here, it’ll experience lower rates of growth, and more gradual rates of share price appreciation.
Again, I wouldn’t jump to that conclusion so quickly. This isn’t the first time Apple has been in the doldrums. After several banner years (2020, 2021), things could be temporarily slowing down, but that doesn’t mean it will not pick up once again.
Today’s issues? These are hiccups, not long-term issues. They will pass in time. Production will get back up to speed. The company will proceed with anticipated product launches like the iPhone 14. More importantly, things could continue to hum along with one of its main areas of growth: its Services division.
Its Services unit, which includes platforms like the App Store and Apple Pay, not only could help deliver growth. It’s also a much higher margin business than its main hardware unit. Atop its existing products/platforms remaining strong in the years ahead, key long-term catalysts for the stock remain in play. Even as excitement for either one has calmed down in recent months.
The Verdict on AAPL Stock
When I mentioned Apple’s key long-term catalysts, I’m of course talking about two things. First, its exposure to the metaverse, with its plans to move into AR/VR (augmented reality/virtual realty) headsets.
Second, its continued development of a fully autonomous electric car. Either of these pending projects could be what enables the company to “level up” once again. Much like how it was able to parlay its success in the early 2000s with the iPod into even greater success with the iPhone.
Right now, Apple shares earn a “B” rating in my Portfolio Grader. Even as investors are overreacting to negative developments, that’s not to say sentiment is just about to swing back to positive.
The market could continue to have a cautious view on shares. Fortunately, if you’re looking to enter a buy-and-hold position in AAPL stock, this works to your advantage, by providing a favorable entry point.
— Louis Navellier and the InvestorPlace Research StaffCould This Stock Be the Best EV Play of 2022? [sponsor]
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Source: Investor Place