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AAPL Beats The Market Again: Why Shares Jumped On Monday

Apple stock has been on a tear relative to the S&P 500 in the past 3 months. Here is why shares topped the benchmark again on September 19, and what investors could expect next.

Apple stock  (AAPL) - Get Apple Inc. Report continues to impress. During a choppy session, the S&P 500 rallied at the end of Monday, September 19, and closed the day up about 0.8%. But AAPL did better: higher by a whopping 2.5%.

Below, I talk about why Apple shares managed to outperform the market yet again. Also, might it be too late for potential investors to own shares of the Cupertino company at current levels?

Figure 1: AAPL Beats The Market Again: Why Shares Jumped On Monday

Figure 1: AAPL Beats The Market Again: Why Shares Jumped On Monday

Read more from Apple Maven: Why Apple Stock Should Be A Winner This Week

AAPL leaves SPY in the dust

Apple’s outperformance on Monday was not a fluke. The stock has been handily beating the S&P 500 over the past three months: 19% vs. the broad market’s 7%.

Figure 2: Apple's performance vs. S&P 500 and Tech.

Figure 2: Apple's performance vs. S&P 500 and Tech.

Year-to-date, AAPL only lagged the S&P 500 for any more than a few days between mid-May and the start of July. As soon as the summer started, Apple rallied relative to the market.

It is possible that word of a strong iPhone 14 cycle may have helped to support share price ahead of the September 7 product launch event. But unlike in previous years, investors did not “sell the news”, as AAPL kept ahead of the S&P 500 in the last two weeks.

Why AAPL rallied on Monday

It is exactly the iPhone 14 that can be credited for AAPL’s sizable 2.5% gain on September 19. Keep in mind that, as reported by the Apple Maven, Wall Street analysts published several reports in the last few days sharing their views that the new iPhone, and especially the pricier versions, had met strong demand worldwide, particularly in the US and China.

On Monday, another bullish report surfaced. According to famed Apple expert Ming-Chi Kuo, Apple has asked supplier Foxconn to shift the production mix from the cheaper iPhone 14 to the more expensive Pro model.

The supply chain move lines up with a recent report from Wedbush’s Dan Ives, who saw that the Pro and Pro Max models would be particularly successful during this cycle.

Apple does not provide financial details on revenues and margins for each iPhone model (or even for the iPhone as a product subcategory). But it is safe to assume that a heavier mix of Pro versions would likely mean better ASP (average selling prices), higher revenues, and richer margins.

Too late to buy AAPL?

The question that is left to be answered is: given the recent outperformance, is it too late to buy Apple stock? In my view, it is not.

First, the equities market continues to be in a fragile state, given (1) high inflation and (2) rising interest rates. I believe that Apple is less sensitive to these two variables than most other companies and stocks, which bodes well for AAPL shares in the short term.

Second, Apple stock is still well off its early January high of $182 apiece. Historically, buying AAPL following a 15%-plus drawdown (where the stock stands today) has produced annual returns that are about 580 basis points higher than buying AAPL at any price (see graph below).

Figure 3: Average one-year return on AAPL, by strategy.

Figure 3: Average one-year return on AAPL, by strategy.

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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting the Apple Maven)