As markets continue to tumble, more and more investors are beginning to nibble at buying stocks that still have nice long-term growth prospects or offer great value. It’s hard to find stocks that haven’t been beaten up over the past month, but the good news is that there are some truly great deals to take advantage of. Trying to call a market bottom is essentially impossible, but buying great companies at great prices doesn’t require you to call the bottom. All it involves is recognizing a good deal when you see one. One stock that has seen quite a bit of selling since the market started its sharp downtrend is Apple (NASDAQ:AAPL).
Something interesting occurred this week, as Apple’s market capitalization dropped below $1 trillion for the first time since September. This market-leading technology company was on fire throughout 2019, but it has experienced quite a significant drop from all-time highs since February. Although the Coronavirus pandemic has caused Apple to close its retail stores outside of China for the time being and reduce its quarterly revenue guidance, that doesn’t mean they won’t come back strong when markets rebound.
One of the big questions that a lot of investors are asking right now is whether or not Apple stock is worth a look at current price levels. Let’s take a deeper look at the company and try to decide if it should be in your investment plans going forward.
Strong Brand, Loyal Customers, Great Products
There’s a reason why Apple’s stock has achieved such massive success in the market. Their products are innovative, useful, and consistently popular. Sure, there probably won’t be too many people buying $1000 dollar smartphones during a recession, but Apple’s diverse product line and strong brand speak for themselves. People are using their existing Apple products more than ever as they are forced to work remotely and entertain themselves at home due to the Coronavirus.
Apple has been creating innovative and useful products for years, and we can expect more great additions to their product line in the future. Revenue from the rapidly growing wearables segment of their business has seen a significant increase and many people are eagerly anticipating their first generation of 5G capable phones. Apple users are extremely loyal to the brand and you can absolutely expect that trend to continue when the economy rebounds from the current issues.
One of the Best Balance Sheets on the Planet
Whenever you are looking for companies to invest in during a recession or economic uncertainty, you typically prefer for them to have a very strong balance sheet. If you strictly look at fundamentals, Apple is a company that arguably has one of the best balance sheets on the planet. The $39.7 billion in Cash and Cash Equivalents should be able to help them weather any economic storm. You also have to be interested in a company that consistently provides shareholders with dividend growth and that generated roughly $64 billion in free cash flow over the last year. In times of economic uncertainty, companies with strong balance sheets are the safest bets, and Apple arguably has one of the strongest.
More Turmoil Ahead?
Let’s face it – Apple has historically been a great addition to any investment portfolio over the last decade. Their products are ubiquitous and their management team is consistently reliable. The short-term downside risk is certainly present, but for long-term investors, you have to like what you are getting with Apple stock at these levels. Apple actually expects that its retail stores in the US will begin to reopen during the first half of April, which is great news for shareholders and prospective buyers.
Before you buy shares of Apple at this time, remember that even the best companies in the world are susceptible to the current market conditions. That means that Apple is still at risk to the additional downside in this headline-driven market. Consumer demand is also decreasing at this point in time, so keep in mind that Apple stock might become a little cheaper in the near future.
On the other hand, adding Apple to your portfolio at these prices means adding a proven company with one of the strongest balance sheets on the market. The chances are good that they will return to dominance after the harsh economic conditions subside. All of this means that Apple is absolutely worth a look at these price levels, but it would be prudent to temper expectations in the near-term.