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Apple’s Fundamentals
Look Good – Value Line

The Value Line Investment Survey newsletter encourages Buy-and-Hold investors to take another look at Apple Inc. (AAPL) given the recent pullback in the stock price.

The California giant of consumer technology is in fact one of the world’s largest marketers of consumer electronics, including the iPad tablet, the iPhone smartphone, and the Apple Watch smartwatch. It also is one of the largest corporations trading on the U.S. exchanges, with a market capitalization of $2.1 trillion. Apple only joined the Dow Jones Industrial Average in March of 2015, but is one of the largest companies on that list, notes Richard Gallagher, Associate Director, Value Line Research.

“Recently, Apple stock has been hurt as part of the broader technology selloff. Prior to that, the stock had been a good performer over the past year, but in recent weeks money has rotated into more traditional industries as investors have looked for undervalued companies that will benefit when the coronavirus pandemic abates, and AAPL’s price action has trailed the broader market. Still, Apple’s fundamentals look good.

The company continues to expand its business. First-quarter results (ended December 26th) were quite impressive with both the top- and bottom-lines handily beating our estimates.

Looking ahead, we expect the sales and earnings momentum to continue for the duration of 2021. Strong demand for 5G-enabled iPhones should lead the way, although there’s been some weakness among the cheaper iPhones. The rise in work-from-home arrangements will probably continue to bolster sales at the Mac and iPad product lines even after COVID-19 illnesses decline.

Finally, the wearable business, anchored by the Apple Watch, ought to continue to be a growth driver for the tech giant. All told, the near-term outlook is bright and we think Apple should post strong results in 2021 and 2022.

This top-quality stock earns high marks in the Value Line Ranking System. Taking into account its very strong financial profile, our Research Department awards AAPL both our highest grade for Financial Strength (A++) and our top rank for Safety (1). Shares of AAPL are currently ranked Above Average (2) for Timeliness. Moreover, this equity has solid risk-adjusted return potential to 2024-2026. Stock buybacks and steady dividend growth ought to sweeten the pot. Thus, buy-and-hold investors are encouraged to take a look here, given the recent pullback in the stock price.”

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