Is the Correction in AAPL Another Buying Opportunity?

In a February 15, 2023, Barchart article, I wrote:

So far, the selloff in AAPL has been a buying opportunity, but the odds of the shares rising ten times from the current level over the next decade are low.  

AAPL shares were at the $153.98 level on February 13, 2023, and rose 29.6% to a $199.62 high in late December last year. At the $172.50 level on March 22, AAPL shares were just below the midpoint of the price in mid-February 2023 and the December 2023 peak. However, the stock dropped to a $124.17 low in January 2023, so the shares are above the $161.90 midpoint, a technical support level. 

Buying AAPL on dips has been the optimal approach for decades

Even the most aggressive bull markets rarely move higher in a straight line. Over the past years, AAPL shares have suffered their fair share of downside corrections. 

 The chart highlights routine downdrafts in AAPL shares. The last significant correction took AAPL 32.1% lower from a record $182.94 high in January 2022 to a $124.17 low in January 2023. The current correction has taken the shares 15.6% lower from the December 2023 $199.62 peak to $168.49 on March 7. 

While AAPL shares could fall further during the current correction, the chart shows that buying on price corrections has been the optimal approach for decades. 

AAPL has always come through in the clutch- Expect a new product

While AAPL shares have declined, it remains the second-leading company by market capitalization.

Source: companiesmarketcap.com

The chart shows that around the $2.661 trillion level, at the $173 per share level, only MSFT has a higher market cap. AAAPL is one of seven publicly traded international companies with over a one trillion dollar value. 

AAPL has a long history of pulling the rabbit out of the hat with new products that have increased revenues, earnings, and market cap. As AI is a significant factor for technology companies in 2024, AAPL recently acquired Canadian artificial intelligence startup DarwinAI, adding to its arsenal. While AAPL launched the Vision Pro headset on February 2, a lower-priced version is likely on the horizon. The M3 MacBook Air launched on March 4. New generation products such as the iPhone, iPad, iWatch, and others will roll out over the coming months. 

AAPL trails the NASDAQ and S&P 500 in 2024

At the $172.50 level, AAPL shares are 10.4% lower in 2024. Over the same period, all the leading stock market indices were higher:

• The QQQ ETF reflecting the tech-heavy NASDAQ was 8.9% higher.
• The DIA ETF reflecting the Dow Jones Industrial Average was 5% higher.
• The SPY ETF reflecting the diversified S&P 500 was 9.7% higher.
• The IWM ETF reflecting the small-cap Russell 2000 was 2.5% higher.

AAPL’s over 10% decline in 2024 could make the stock a value play as the bull market in stocks continues in 2024.  

Cash is king

AAPL had a significant cash balance of $73.1 billion as of the end of 2023. The cash on hand allows the company to make strategic, accretive acquisitions when opportunities arise. As a technology company, competition for AI will be crucial for growth. AAPL’s cash balance positions the company for opportunities over the coming months and years.  

Scale-down buying, leaving room 

While AAPL shares could fall further, the long-term trend suggests that a scale-down buying approach will yield optimal results. I favor AAPL as a value play in the current market, as it has underperformed all the leading stock market indices. 

AAPL’s founder, Steve Jobs, passed the baton to Tim Cook in August 2011. Cook has led the company for over a decade as the shares rose from the August 2011 $14.27 high to over $172 per share, a more than ten-fold increase. Betting against AAPL under Cook’s leadership has been a mistake, and I expect the stock to eventually make higher highs in the bullish trend that has been firmly intact since 1984. 

On the date of publication, Andrew Hecht did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.