Apple stock (AAPL) - Get Free Report continues to head lower. After outperforming for most of 2022, shares of the Cupertino company had their worst week since March 2020, down 8%. AAPL has headed lower six out of the past seven weeks.
But one celebrity investor does not seem to be fazed – in fact, he thinks that investors should buy Apple stock following this dip. Below is what CNBC’s Jim Cramer has said recently about AAPL, along with my opinions about his views.
(Read more from Apple Maven: AAPL Bears Do A Happy Dance: Were They Right?)
Jim Cramer’s take on AAPL
Sometimes, it is refreshing to hear a simple, no-frills take on investment strategies. This is what I believe Jim Cramer did on Friday morning. He started by saying the following:
“Why not buy good companies? Why buy companies that are NOT doing well and anticipate a bottom when we can buy really good companies that are doing well right now? What’s the matter with that?”
It sounds obvious, doesn’t it? When the market is in distress, which is certainly the case at this moment, investing in quality and secular (not cyclical) growth stories tend to be the better approach.
Inflation is still high, interest rates are rising, and the economy could be slowing down. So… take a gamble and buy highly-leveraged airline stocks? I think not.
Jim Cramer elaborated a bit more on his views. He seems to like the fundamentals of the business and looks at history to justify a buy a current levels – something that I have repeatedly defended as well. Here is Jim’s quote:
“The high-end Apple is doing well, the low-end Apple has too much inventory. I like the service economy. Apple has had periods when it’s been down 20% or 25% and you had to buy it, not sell it. But you’re not going to catch the bottom.”
Notice this very last sentence, which Jim managed to squeeze in at the end of his discourse about Apple. Once again, simple but wise words, in my view.
Buying Apple stock at the current price of $140 can be both (1) a great play for the long run and (2) not the cheapest that shares will ever be. Fundamentally, I think this is a big mistake that many investors make: not buying a good company out of fear that the stock could go lower.
I believe, in fact, that AAPL can very well dip further from current levels. I talked very recently about this period of increased volatility, and that investors should expect more pronounced ups and downs in the short term. That is to say, don’t be surprised to see AAPL dip into the $130s.
Still, I find it likely that, given enough time, Apple stock investors will be glad to have held on to their shares for the long haul. In the next few weeks, however, they need to be comfortable with volatility and the idea that catching a bottom is something very hard to accomplish.
Apple stock has had a rough week, and it could soon lose its status of outperformer for the year. What would you do in this situation?
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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)