Decoding Apple’s Stock Trajectory: Time to Buy, Hold, or Sell AAPL?

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Like other “Magnificent Seven” stocks, Apple (NASDAQ:AAPL) shares rallied during November. During the month, AAPL stock rose from $171 to around $190 per share, representing around an 11% increase in the span of a few weeks.

Since late last month, however, AAPL’s latest rally has petered out. Shares are now holding steady near the $190 per share price level. Not only that, concerns about a post-rally pullback are rising.

Commentators and investors are again concerned about valuation, and about the tech giant’s future growth prospects. Yet if it seems like that the latest price action/shifting near-term sentiment is a red flag to sell, think otherwise.

Even if shares encounter near-term weakness (which by the way isn’t set in stone), much still points to this “trillion dollar club” member not only eventually re-hitting past all-time highs, but climbing to substantially higher price levels over time. Here’s why.

AAPL Stock and the Return of Fear, Uncertainty, and Doubt

Since Apple shares plateaued in price around Thanksgiving, fear, uncertainty, and doubt (or FUD) has once again come out of the woodwork. Check out recent commentary about the stock, and you’ll see what I mean.

These bearish arguments about AAPL stock are based upon a cut-and-dry premise: Apple’s valuation is far too high, when you compare it to future growth forecasts. On the surface, I can see why some are making this argument. The current trading price of shares in the tech giant is approximately 29 times forward earnings.

According to sell-side forecasts, Apple’s earnings are expected to rise by 6.7% this fiscal year (ending September 2024), with earnings growth re-accelerating to around 8.9% during the following fiscal year. Still, while I agree AAPL is pricey, some of the negative takes out there, including one from a Seeking Alpha commentator suggesting that the 10-Year Treasury will outperform AAPL over the next few years, seem way too pessimistic.

Future appreciation for the iPhone maker’s shares may arrive more gradually in the future than in the past. However, I wouldn’t jump to the conclusion that shares are doomed to not only underperform the broad market, but Treasuries as well.

Solid Returns Are Well Within Reach

Before fully embracing the most negative views on AAPL stock, remember two important factors. For one, although Apple’s valuation is high compared to the market overall, don’t assume that means the company needs to report off-the-charts growth to maintain this valuation.

AAPL’s blue-chip status and strong financials suggest that a high single-digit earnings growth would be enough to sustain a high-20s forward multiple. This suggests that AAPL could keep rising in tandem with earnings growth. Right off the bat, the aforementioned argument that Apple will underperform 10-year Treasuries (currently yielding around 4.23%) seems dubious.

Second, not only could shares outperform Treasuries, outperforming the broad market over the coming years remains well within reach as well. As Wedbush’s Dan Ives recently pointed out, iPhone 15 sales have been off to a good start this holiday season.

There may be strong potential for results during this quarter, and for the full fiscal year, to handily beat current expectations. Looking at a longer time frame, there’s ample opportunity for Apple to report the elevated growth necessary to really kick shares back into high gear.

The Future Remains Bright, as Bearish Arguments Fall Flat

As I’ve pointed out previously, factors like a rebound in iPad and Mac sales, plus continued growth of Apple’s highly-profitable Services unit, suggest results down the road will come in much stronger than currently anticipated.

Apple has yet to really capitalize on the generative AI trend, but as Morgan Stanley analysts pointed out last month, the company stands to benefit tremendously from the rise of so-called “Edge AI,” or integrating artificial intelligence capabilities into hardware and software applications across the board.

Put simply, the future remains bright. A lot points to a long-term growth resurgence for Apple, thanks to existing and emerging catalysts. Bearish arguments fall flat, with some of them appearing very hyperbolic.

If you own AAPL stock, hang on. If you’ve yet to buy, sit tight and pounce on the next round of major weakness.

AAPL stock earns a B rating in Portfolio Grader.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

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