Following this massive jump in price, you may be concerned that you’ve “missed the boat” with Apple.
I wouldn’t necessarily jump to this conclusion.
Yes, after its latest run-up, subsequent gains may arrive less rapidly for AAPL. Still, that doesn’t mean this long-term tech winner is about to become an underperforming stock.
Why? Let’s dive in, and see why Apple hasn’t gotten ahead of itself, and why it remains one of the stronger buy-and-hold opportunities out there.
A Closer Look at AAPL Stock
Besides being skeptical about continued gains with Apple, you may be curious why shares accrued these gains in the first place. After all, it was the emergence of the generative artificial intelligence mega-trend kicked off this rally, right?
Other mega-cap tech stocks have relatively stronger generative AI catalysts than AAPL stock does at present.
This may suggest that investors have gone overboard with this stock, by pricing in AI potential that’s years away from turning into improved results. Yet while “AI mania” has certainly helped keep shares moving upwards, this has not been the main factor at play.
Rather, something else has driven Apple higher. As always, the market is forward-looking.
Instead of dwelling on the continued tech slump, investors have been pricing AAPL on the company’s rising chances of experiencing a growth resurgence, as demand trends in tech normalize.
Recent results have pointed to such an outcome happening. During the March quarter, iPhone sales exceeded expectations. Although revenue for its Services unit missed estimates, this division still grew, despite challenges in the sector.
There may be a similar takeaway with Apple’s upcoming earnings report (set for release on Aug 3).
Overbought and Overvalued? Not So Fast
Although the 2023 AAPL stock rally has been justified, you may still think that shares are “doomed” to generate weak returns from here. As I discussed previously, some Apple skeptics have been arguing that AAPL has become overbought and overvalued.
Per the skeptics, Apple’s earnings growth is likely to underwhelm, causing a serious price correction. However, there’s a reason that a company expected to report an earnings decline this fiscal year trades at such a high earnings multiple. Future earnings estimates call into question whether these AAPL bears are making the right call.
Sell-side analysts on average forecast that Apple will grow earnings by around 10% next fiscal year, and the fiscal year after that.
Sure, this may still sound like not enough growth to justify an earnings multiple north of 30, but keep in mind that consensus may be conservative.
Considering the high potential for growth from the iPhone’s penetration of the Indian smartphone market, Apple’s potential to tap into the rise of the metaverse, and even from a key moonshot project, getting back to double-digit growth is attainable.
Bottom Line: Still a Strong Buy-and-Hold
Don’t approach AAPL, with the expectation the stock follows up its 50 percent-plus jump higher with another 50% rally between now and year’s end.
You should, however, continue to consider Apple one of the strongest buy-and-hold opportunities out there, for investors of all stripes. The skeptics may be calling a top, but there is a massive flaw with their bearish argument.
What’s the flaw? The bear case for AAPL is based too much on what has happened, instead on what likely lies ahead.
Improved macro conditions are on the horizon. Of greater importance, there are a plethora of growth catalysts in play that will help justify a continued gradual move to higher prices for shares.
Now fully aware of the promising bull case for AAPL stock, feel free to enter/add to a position at current prices.
AAPL stock earns a B rating in Portfolio Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.