If you’re going to maintain a diversified stock portfolio, it’s practically mandatory that you have at least a handful of Apple (NASDAQ:AAPL) stock. Otherwise, you’ll miss out on the gains that are coming in 2024. Sure, Apple has challenges to deal with. However, that’s true of every company and if any technology juggernaut can overcome its obstacles and prevail, it’s Apple.
Among the “Magnificent Seven” tech titans, Apple is one of the oldest and most established. Apple stock has an added safety factor because it’s not too volatile, and because Apple is a well-known business with deep customer loyalty. So, let’s dive into Apple’s obstacles and opportunities, and see if there’s a worthwhile bull case for prospective investors.
Value Investors Shouldn’t Worry Too Much About AAPL Stock
The bearish arguments against owning Apple stock just don’t hold up under scrutiny. For example, some investors might worry about Apple’s valuation. Currently, Apple has a GAAP trailing 12-month price-to-earnings ratio of 31.1x.
That’s above Apple’s five-year average trailing P/E ratio of 26.28x, but it’s not outlandishly high. We’re not looking at dot-com bubble valuations here. We can revisit this conversation if Apple’s P/E ratio reaches the 40s and 50s.
As long as Apple remains profitable and follows a smart business strategy, the company’s valuation shouldn’t keep investors up at night. For instance, Apple plans to enable easier/smoother text messaging between iPhone and rival Android smartphones.
That’s a smart move as it will keep the customers happy and might also help to placate regulators in the European Union and elsewhere.
Don’t Let China Challenges Deter You
Another pillar of the bearish argument against buying Apple stock is that the company has obstacles to overcome in China. Specifically, reports that China banned government employees from using iPhones at work. It’s there also are reports that China’s government denied this iPhone ban.
Granted, Apple’s recent smartphone sales in China haven’t grown at the same pace as the smartphone sales of China-based competitors like Huawei and Xiaomi (OTCMKTS:XIACF). That’s not the full story, though, as Apple is still selling plenty of smartphones globally.
According to Counterpoint Research (per Apple Insider), “global monthly smartphone sell-through volumes grew 5%” year over year in October. Furthermore, Counterpoint Research cited the “launch of iPhone 15 series” as a contributing factor to the global smartphone market’s growth.
There’s no need to worry about Apple’s leadership status in this field. Counterpoint Research reportedly stated that Apple maintains a whopping 43% share of the global smartphone market. In other words, obstacles in China aren’t stopping Apple from selling plenty of mobile devices in other geographic regions.
AAPL Stock: A Safe and ‘Magnificent’ Holding for Every Investor
Apple’s critics can always come up with excuses not to buy AAPL stock, but the bearish argument isn’t strong enough to withstand scrutiny. After all, Apple’s investors keep on winning in the long run and the short sellers only end up on the wrong side of the trade.
If you don’t want to own every “Magnificent Seven” stock, that’s understandable as some of them are better than others. Safety-minded investors can be selective and just hold a few shares of Apple stock, and maybe a few other carefully selected mega-cap tech stocks. Just ignore the worry warts and stay in the trade, as Apple always provides outstanding value to its loyal shareholders.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
