I write more about Apple stock than I ever mean to, but people just love to talk to me about it, so here we go.
New iPhone New Apple Stock Moves
Apple stock is one of those stocks that gets a lot of attention, and action, from people who otherwise don’t invest in individual stocks much at all. That is, among your own friends, chances are that there are people who own Apple stock, and nothing else other than some company stock, or maybe some ETFs or mutual funds. These investors are, not surprisingly, often moved by news, other than any sort of analysis.
In addition to these investors, there are a lot of very experienced investors with Apple stock in their portfolio, and they both watch the fundamentals, AND try to guess how others will reaction to Apple stock.
All of this adds up to a stock that likes to move A LOT based on any single news event or earnings report.
For the last several months, Apple stock has not done well. There were concerns that the company could no longer innovate, and the momentum left behind by Steve Jobs had finally run out. But, last week, Apple introduced its new iPhone 7. Ironically, while the phone has been upgraded to the latest hardware, there isn’t really anything new and different, beyond the elimination of the headphone jack, and the introduction of wireless earbuds.
None of that matters, however, because Apple has a very loyal customer base that buys the new version of the iPhone as soon as it comes out, no matter what. Then, there is a follow up customer base that buys it a little later after all the buzz dies down. No matter how you slice it, the new iPhone means a bunch of new money for Apple. And, today, the company announced that it has sold out of the initial run of iPhone 7 Plus, without telling anyone just how many that is.
It seems everyone suddenly remembers that Apple makes iPhones and that Apple customers buy iPhones, and so the stock is up over 11% for the week, last I checked.
Is Apple Stock a Good Investment Now?
This brings us to the question that everyone has on their mind. Is Apple stock a good investment now with the new iPhone.
The answer is that Apple is largely the same company it was last month, when the stock was down for the year. In other words, Apple is no better or worse of an investment than it was before the iPhone 7 was announced. Granted, great iPhone sales may offer a short-term bump in Apple stock price, but the fundamentals remain unchanged.
To answer the question, Apple is a good investment. Its management is solid, as its is balance sheet and fundamentals. If that weren’t enough the company also has a dividend yield over 2%. All of that makes it a pretty great investment.
That being said, the stock price will go up and down. It will go up if people are impressed by iPhone 7 sales through year end. Of course, it will go down if those sales are not as strong as people would like. In other words, the stock price for the short-term for Apple is going to be completely based upon the reaction (or overreaction) to news reports. If you can’t handle that short-term volatility then that’s another story.
Of course, as I’ve repeatedly said, unless you have $100,000 for investing in individual stocks, you shouldn’t be buying individual stocks at all.
If you insist on wanting to invest “something” in Apple stock, first do yourself a favor and figure out what the 11% boost would have meant to you in real dollars, not percentages. In other words, if you’re like my friend who insists on putting $1,000 into Apple stock, “because I know it’s going up,” that 11% pop was worth $110, minus commissions. If that is worth it to you, then be my guest.
The key will be the holiday shopping season. If Wall Street is impressed with the 4th quarter sales of iPhone, look for a nice runnup in the stock. But, if they are “disappointing,” expect a major hammering.