Apple Inc. stock has fallen below $100 a share raising concerns over the firms future growth. Unlike many, Michael Yoshikami (CEO and founder of Destination Wealth Management) believes these concerns are overblown for several reasons, and Apple is still a quality growth name for “portfolio strategies.”
Yoshikami gave several reasons for why he is bullish on the stock. Firstly, the firms boast of massive cash flow, and billions of dollars of excess cash flow are generated every quarter that keeps on accumulating thus “adding to the core valuation of the stock.”
Secondly, strong iPhone sales will continue drive significant profits despite concerns by several analysts. This is so, Apple enjoys a 40% margin on the iPhones, which is an incredible as hardware technology is a competitive business. New products in the new categories is going to benefit Apple in time ahead. Apple Watch’s next version is expected to be more useful, and Apple TV and Apple car seems to bring lot of good fortune for the firm, believe Yoshikami.
Just like Google, Apple too is “incubating ideas.” Alphabet has been designed to take maximum possible advantage of new opportunities and seed long-term projects. Similarly for Apple, Apple car is one such project that will offer the firm with a lot of opportunities in the future.
Another reason is Apple’s valuation appear attractive on comparing it with overall NASDAQ index on a historical basis. The firm is continuously making huge profits, and despite that it is trading at a discount. Sentiment on Apple’s stock is “awful” now, and it could get even “worse,” but Yoshikami believes, “Negative sentiment is often a buy signal and the core fundamentals of the company are still intact.”
Apple stock now below $100
On Thursday, Apple shares closed below $100 for the first time since October 2014 owing to concerns that the demand for iPhones is waning. The iPhones contribute maximum to the firms revenue – more than 60% – and thus, are the most critical piece of the firms several products and services.
So, it is natural that any sign of weakness for the product causes concern among investors. The other products of the firm have not seen great success for example – the iPad demand has seen a decline in the recent years and Apple Watch is yet to become a mainstream hit. Apple, which is the most valuable firm in the world, has lost about $52bn in market cap this year.
On Thursday, Apple shares declined 4.2% to close at $96.45. Year to date, the stock is down over 8% while in the last one-month, it is down over 18%. The stock has a 52-week high of $134.54 and a 52-week low of $92.