Apple: 'A good hiding place in this volatile market'

From Ben Levisohn's "Apple Is the Last FAANG Standing" in this week's Barron's:

Apple is the last FAANG standing—and its earnings report this coming week could go a long way toward determining if the stock market bounces back or slides even further.

As bad as this year has been for the stock market, it’s been even worse for the original FAANGs. While the S&P 500 has fallen 10.4% in 2022, Facebook parent Meta Platforms (ticker: FB) has slumped 45.3%, Amazon.com (AMZN) has dropped 13.4%, Netflix (NFLX) has tumbled 64.2%, and Google parent Alphabet (GOOGL) has fallen 17.4%.

The expanded FAANMGs haven’t done much better, with Microsoft (MSFT) falling 18.5%, and only Apple (AAPL)—down 8.9% in 2022—outperforming the S&P 500...

That leaves the market’s hopes resting on Apple, the largest of the tech giants. Unlike the rest of Big Tech, Apple stock is still trading above its 40-week moving average, notes Roque, while Mark Newton, head of technical strategy at Fundstrat Global Advisors, also noted Apple’s relative strength—and the impact it has on the stock market and on the Invesco QQQ exchange-traded fund (QQQ).

Fundamental analysts, too, are generally bullish on Apple. The company is expected to report a fiscal-second-quarter profit of $1.43 a share, up 2.1% from $1.40 one year earlier, on sales of $94.1 billion, up 5% from $89.6 billion. Many analysts believe it will be able to surpass those numbers despite numerous headwinds, including supply-chain issues and shutdowns in China.

Strong growth in Apple’s very profitable services business should also help alleviate concerns, writes Deutsche Bank analyst Sidney Ho: “We believe AAPL stock is a good hiding place in this volatile market.”

My take: Apple's resemblance to the rest of the FAANG is diminishing by the quarter.

5 Comments

  1. Robert Paul Leitao said:
    The acronym FANG was popularized by Jim Cramer back in 2013. Apple was added four years later as the second “A” in the collection of equities. This is an artificial grouping of equities in which Apple doesn’t really belong as a component. First, the company’s history dates back to the 1970s and it is the only major device maker in the grouping. Additionally, it’s the only one of the FAANG stocks that pays a quarterly dividend. Why anyone is attempting to compare and contrast share price performances among a collection of different companies on a short-term basis as the world exits a once-a-century health crisis, a period of unprecedented economic stimulus in response to the crisis and now central bankers seeking to reign in rampant inflation in response to the stimulus that was in response to the health crisis is beyond me. Apple’s mission isn’t to “save” the market. Thirty years ago it was the only one of the so-called FAANG stocks that even existed. In my view, it’s most likely to be the one that remains in existence thirty years from today.

    2
    April 23, 2022
    • Michael Goldfeder said:
      With the hit Netflix experienced this past week, coupled with the Fed’s discussion of a .75% rate hike in June, it was disconcerting to see the huge market sell off this week. However, given that it is a market of stocks, and the positive earnings reports produced by Tesla and a few others, it just reinforces the idea of investing in quality names that are actually deriving profits. I’ll never understand investing in companies that are “growing”, yet losing money. That formula only works for the Federal Government, and currently that blueprint isn’t looking too good.

      It’s rather amusing to read all of the various negative articles on Apple, yet they just continue to keep moving forward like the juggernaut tortoise they truly are compared to other “tech” companies. With another record earnings report being released on Thursday, the real impact on the stock IMO will be the announcement of the buyback and dividend increases for the rest of the year. Perhaps even Bill Ackman will move into Apple as he has a substantial $430 Million hole that needs to be recouped after fleeing Netflix when they missed on their subscriber numbers for the past quarter.

      If that’s the case, then let me be the first to welcome Bill onboard and encourage him to become a subscriber to the Apple 3.0 Platform as the information provided here is invaluable to anyone with a stake in Apple. I don’t believe that there’s a comparable Platform for Netflix. But I could be wrong.

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      April 23, 2022
      • Robert Paul Leitao said:
        Michael: Microsoft, the other $2+ trillion market cap enterprise and, along with Apple a DJIA component, reports on Tuesday. In my view, the market’s response to Microsoft’s results and forward guidance on Tuesday will reveal more about investor sentiment and the current direction of the market than the results from Meta or Netflix this earnings season. In my view, it’s time to stop pretending the so-called FAANG stocks as a group have any relevance as a market or economic indicator.

        3
        April 23, 2022
        • Michael Goldfeder said:
          @Robert: Agreed. In turn we can also revise the worn out “FAANG” acronym to either “The AM clock” with Apple first then Microsoft, or call them “MA”, in honor of Ma and Pa Kettle.

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          April 23, 2022
          • Robert Paul Leitao said:
            Michael: Let’s go with AM. I always prefer for Apple to be out front.

            3
            April 23, 2022

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