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Apple Stock: Can 2022 Be As Good As Last Year?

Apple stock had a great year of returns in 2021, following even more impressive gains in the two prior years. On the heels of this long rally, can AAPL perform well once again in 2022?

Apple stock  (AAPL) - Get Apple Inc. Report ripped higher in 2021, pleasing investors who chose to bet that the Cupertino company would carry its momentum forward from the pandemic year. But those same investors might be feeling a bit concerned about whether shares can continue to climb, following several months of nothing but blue skies.

The Apple Maven looks at historical performance since right after the IPO and reaches an encouraging conclusion about the gain potential in AAPL in 2022 — even after a long rally.

Figure 1: Apple CEO Tim Cook.

Figure 1: Apple CEO Tim Cook.

(Read more from the Apple Maven: Apple Stock: Careful With Big Tech in 2022, Says This Expert)

AAPL: typically a high-flying stock

The chart below shows the distribution of annual returns in Apple shares since the 1980s. Although 2021 gains of 35% may seem impressive at first, the figure is in fact slightly below the historical average. In a total of nine years, annual gains fell between 25% and 50%.

While 2021 may have been fairly typical for Apple shares, the same can not be said of 2020 and 2019. During those two years, returns came in at above 80% each, well above the historical average. Therefore, it is not the 2021 gains alone that impressed the most, but the full three-year returns since 2019.

Figure 2: Distribution of AAPL annual returns since IPO.

Figure 2: Distribution of AAPL annual returns since IPO.

(Read more from the Apple Maven: What Happens After The Santa Claus Rally?)

On the three-year performance, Apple’s annualized 67% achieved between 2019 and 2021 was much better than the historical average of less than 30% — see chart below. In only one other instance did the stock rise at a substantially faster pace: the several years leading up to the Great Recession.

So, looking at performance from a rolling three-year perspective, recent gains in AAPL stock have been abnormally high, which can be discouraging to some. The better news is that rallies have not necessarily been followed by a selloff.

Figure 3: Distribution of AAPL annual 3-year returns since IPO.

Figure 3: Distribution of AAPL annual 3-year returns since IPO.

Take 2005. At that point, Apple stock had climbed a whopping 116% per year over the previous three years. Still, 2006 saw decent returns of 18%, and 2007 (the year of the first iPhone model) witnessed a staggering 12-month rally of 133%.

In 2011, three-year gains reached a very respectable 68% annualized. Still, over the next three years, returns were positive in each case, and by as high as 41% in 2014.

Apple Maven’s take

The bull case for holding AAPL stock into the new year is well known: a successful 5G-capable iPhone cycle, high demand for most if not all other products and services, in addition to multi-year opportunities in the metaverse (mixed reality) and autonomous vehicles.

Those who were not heavily invested in AAPL in the past three years could be feeling a bit of “FOMO” at this point (“fear of missing out” on another leg higher). The good news is that, judging by historical performance, only because Apple stock has performed well in the recent past does not mean that it will not do so again in 2022.

Twitter speaks

Apple stock returned 35% in 2021; 82% in 2020; and 89% in 2019. What gains or losses do you expect of AAPL in the new year?

(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)