As technology valuations continue higher, many investors may be enticed by the idea of trimming one’s holdings in companies that may be viewed as having run too far too fast in terms of their valuations relative to earnings potential. Apple Inc. (NASDAQ:AAPL) is a company that some may view as having fallen into this category. However, I believe Apple is a stock with a tremendous potential for outsized growth over the long-term and deserves its valuation currently.
The company’s stock price and market capitalization is staggering, and many investors who have missed out on this rise may choose to wait on the sidelines for a better price. Indeed, this is a stock that has provided investors a few nice buying opportunities over time, and such a strategy could prove to be a good idea for those who find that Apple doesn’t meet their fundamental requirements right now.
For those who own Apple stock, I think simply holding onto this gem of a company and buying more on dips is the best way to go. Trimming one’s position could potentially reduce one’s exposure to the near-term outperformance this stock has continued to produce over time. I think the near-term could be more volatile for companies with valuations like Apple, but do think that these mega-cap companies could outperform their smaller-cap counterparts for some time. Accordingly, I’d be wary of trimming stocks like Apple at any point in time, and would recommend investors consider buying the dips instead if one is concerned about volatility.
Invest wisely, my friends.
Tech Insider
