Seeing the share price of perhaps one of the most well-run and profitable technology companies of all time plummet like it has in recent months has continued to dim the outlook for value stocks, or really any company which mass produces high end products, at this point in the economic cycle.
The feeling is that Apple Inc. (NASDAQ:AAPL) may have already hit "peak iPhone," and in the wake of interest rate hikes, a flattening yield curve, and two indices which have now retreated into bear market territory, placing one's faith in the hands of a company which appears to have seen its best days can certainly be viewed as a risk. With no "gotta buy it" product announced, investors have little to hang their hat on, other than a massive pile of cash and quarterly earnings that are larger than the market capitalizations of most companies.
I believe Apple has significant room to grow margins in the short to medium term, via acquisitions of part or all of its supply chain. Additionally, I expect to see the company aggressively continuing to reinvest in research and development, at a time when most companies are fighting for dear life, making Apple one of those "innovation" names that continues to churn over the long term, something long term growth investors will appreciate.
Short-term numbers be darned, I expect Apple to make it out of this next economic cycle at or near the top of the pile, a bold prediction but one which many investors smarter than I have heeded, averaging down on this valuation multiple decline.
Invest wisely, my friends.
