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Apple Stock: A Better Deal Now, But Is It A Buy?

Apple stock saw $3 trillion in market cap for a brief moment, but it is now in correction territory. As valuations improve, is now a good time to buy shares?

Apple stock  (AAPL) - Get Apple Inc. Report and the rest of the tech space have been facing severe headwinds in 2022. Shares of the Cupertino company peaked at $182 only three weeks ago, then proceeded to lose 10% of their value as of the writing of this paragraph.

While I was once concerned about stretched valuations, I now start to feel slightly more comfortable about accumulating AAPL. Will buying this dip prove to be a good strategy?

Figure 1: Apple Stock: A Better Deal Now, But Is It A Buy?

Figure 1: Apple Stock: A Better Deal Now, But Is It A Buy?

(Read more from the Apple Maven: Apple Stock: It Could Reach $5 Trillion By 2025)

AAPL: to the moon, now heading back

As recently as mid-December, when AAPL traded at nearly $180 apiece, I suggested that it made sense to trim the position around the edges. To me, Apple stock had rushed too quickly ahead of the Nasdaq starting in November, and an imminent pullback seemed reasonable.

Shortly after that, the stock began to correct in early 2022. So, I proposed a high-level plan: buy at $160 per share and below, and “back up the truck” if AAPL tanks below $150. Currently, Apple shares are valued at around $162, and a dip-buying opportunity could be taking shape.

All in, or wait longer?

It is tough to guess correctly where this bottom could be. Historically, buying Apple after a 10% correction has proven to be a great deal: median one-year return of 47% in the post-2007 iPhone era vs. a more modest 29% when shares are bought closer to historical peak prices.

So, in the long term, buying AAPL at $162 will eventually prove to be a smart decision, most likely. But in the short term, anything can happen. In fact, considering the decisively bearish tone of the market towards tech stocks, I bet that Apple stock will see $155 before it sees $200.

Again: what do I do?

If I had a well-functioning crystal ball, I could tell exactly when to buy Apple. Since I do not, and neither does anyone else, I suggest investors understand their financial goals, trading preferences and risk profiles.

Anyone who buys Apple stock now, during a moment of intense volatility, needs to accept that prices are likely to fluctuate in the short term. If buying and holding for the long term, try not to check the broker screen until it is time to rebalance the portfolio.

Those who buy AAPL for a quick trade should be more careful. First, momentum and investor sentiment are clearly not favorable at this moment. Second, the risk of sizable losses is real. Have a plan in case AAPL continues to sink from here.

Twitter speaks

Apple shares flirted with the $3 trillion valuation mark early in January, but then tanked. What do you think will prove to be the best “buy the dip” levels for this stock?

Is the price right?

Looking at a company’s business fundamentals is only half the work needed to find a good stock. How much one pays to own the shares is a key factor in the success of any investment. This is why valuation analysis is so important.

Alpha Spread’s user-friendly platform allows you to estimate a stock’s fair value –through valuation multiples, discounted cash flow, and more. I believe that the service is a must for anyone looking to own the right stock at the right price. Check out alphaspread.com and get started with a 7-day free trial.

(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)