Why Apple is the only tech stock on the rise today
Apple CEO Tim Cook attends the Allen & Company Sun Valley Conference on July 8, 2021 in Sun Valley, Idaho.
Kevin Dietsch | Getty Images
Apple stock rose more than 2% on Tuesday as stocks fell amid concerns over the new omicron variant Covid, showing investors view the company as a safe haven during market uncertainty.
Other large-cap tech stocks like Google, Amazon, Meta (formerly Facebook) and Microsoft are down for the day amid a larger market sell-off. The Dow Jones Industrial Average lost more than 500 points, the Nasdaq composite lost more than 1% and the S&P 500 lost around 1.4% on Tuesday.
Needham analyst Laura Martin told CNBC investors turned to Apple on Tuesday because the company has stupendous cash flow, allowing it to weather any economic downturn and profit from falling prices. price.
“There’s a flight to quality with companies that you know will weather the storm, won’t go bankrupt, won’t have financial hardship,” Martin said, noting that other large-cap tech stocks are not as declining as small businesses.
Martin added that Apple is positioned to introduce new products to fuel new growth, including headphones.
“The biggest criticism of Apple over the past five years is the lack of new products. When you look at the product pipeline, there’s a lot of excitement, especially in the press today about how they’re going to introduce augmented reality glasses at the next WWDC in June, ”Martin said.
Martin said there were indications that Apple’s current products, particularly its iPhone Pro models, were selling well, which could lead to a big December quarter for the company. Apple said in October that it expected record revenue in its fiscal first quarter, compared to $ 111.4 billion in sales last year, despite supply constraints.
“Lots of really good numbers from retail on how products sell. Tablets, especially high-end iPhones, all of which indicate they’re going to have high margins and high revenues for the fourth. quarter of this year, ”says Martin.
Apple uses its cash flow not only to invest in new products, but also to return capital to shareholders in the form of dividends and buybacks, the latter of which can help keep the share price stable. And Bernstein analyst Toni Sacconaghi said in a note to investors earlier this month that he expects Apple to continue repurchasing shares over the next five years.
“Our analysis suggests that Apple is likely to be able to continue repurchasing ~ 3-4% of its shares per year until the end of 2026 while increasing its dividend per share by 10% per year without taking on net debt on its balance sheet, ”Sacconaghi said in a Nov. 17 note to investors.
Apple shares are up about 25% for the year.