(IBD) – Apple (AAPL) saw its shares jump into record high territory after its June-quarter earnings report. The consumer electronics giant surged to a market capitalization of over $2 trillion. But with a pullback in Apple stock, many investors are wondering if AAPL stock is a buy right now.
Apple has been an American success story several times over. First, it ignited the personal computer revolution in the 1970s with the Apple II. Then it reinvented the PC in the 1980s with the Macintosh.
Co-founder Steve Jobs returned to run Apple in 1997 and oversaw a winning streak of innovations that included the iMac, iPod, iTunes, iPhone, iPad and the App Store.
The biggest driver of Apple’s modern success is the iPhone. The game-changing smartphone, which debuted in 2007, sparked years of massive growth and created a loyal base of customers willing to buy Apple products and services.
But iPhone sales have slowed as users hold on to their handsets for longer periods between upgrades. However, the company could be on the brink of a major upgrade cycle with its first 5G iPhones.
Apple Stock News: iPhone 12 Debuts
On Oct. 13, the Cupertino, Calif.-based company announced four 5G-enabled smartphones, the iPhone 12 series. The handsets have display sizes of 5.4, 6.1 and 6.7 inches and starting prices ranging from $699 to $1,099.
In addition to ultrafast 5G wireless connectivity, the 14th-generation iPhones have improved cameras, speedier processors and a new design. The Pro models of the iPhone 12 have a new rear-facing lidar scanner. Lidar, short for “light detection and ranging,” will permit depth sensing for photo and video applications, including faster autofocus in lowlight situations. Plus, it will open up new possibilities for augmented-reality experiences.
Apple also introduced the HomePod Mini smart speaker. The $99 music speaker will give Apple better competitive footing against market leaders Amazon.com (AMZN) and Alphabet’s (GOOGL) Google.
Investors were unimpressed, primarily because the news had leaked before the online launch event. Apple stock fell 2.7% the day of the iPhone 12 launch. It was Wall Street’s worst reception ever to an iPhone launch.
Apple Opportunities For Growth
With iPhone growth slowing, investors are wondering what the next big growth driver will be for Apple stock.
Lately, two businesses have given Apple’s sales and profits a boost: services and wearables.
In the June quarter, Apple’s services revenue rose 15% to $13.16 billion. Services include App Store, AppleCare, iCloud, Apple Pay, Apple Music, Apple TV+, Apple Arcade and other offerings.
Meanwhile, Apple’s Wearables, Home and Accessories unit saw sales jump 17% to $6.45 billion in the June quarter. This unit includes wearables like the Apple Watch, AirPods wireless earbuds and Beats headphones. It also contains the Apple HomePod wireless speaker and other miscellaneous gadgets.
At a product launch event on Sept. 15, Apple unveiled the Apple Watch Series 6 smartwatches and the lower-cost Apple Watch SE. It also introduced subscription service bundles called Apple One as well as the new Apple Fitness+ service. Still, Apple stock sold off on the news.
Apple Earnings: Beat And No Guidance
On July 30, Apple delivered better-than-expected June-quarter results.
Apple earned $2.58 a share on sales of $59.7 billion in its fiscal third quarter ended June 27. Analysts had predicted earnings of $2.04 a share on sales of $52.25 billion. On a year-over-year basis, Apple earnings rose 18% while sales climbed 11%.
In the June quarter, iPhone sales climbed 2% to $26.42 billion. The company’s new lower-cost iPhone SE gave sales a lift in the quarter.
Mac computer sales jumped 22% to $7.08 billion in the June quarter. IPad sales leapt 31% to $6.58 billion. The work-from-home and school-at-home trends driven by the Covid-19 pandemic fueled the gains in both product categories.
Apple did not issue guidance for the September quarter, citing market uncertainties related to the coronavirus pandemic.
However, it did announce a 4-for-1 stock split. AAPL stock began trading on a split-adjusted basis on Aug. 31.
Exclusive Apple Stock Ratings
Since the bounce back from the lows of the coronavirus stock market crash, Apple stock has been outperforming the broader market.
AAPL stock has an IBD Relative Strength Rating of 92 out of 99. That puts it in the top 8% of stocks over the past 12 months.
Apple stock has an IBD Composite Rating of 91 out of 99, according to the IBD Stock Checkup tool. IBD’s Composite Rating combines five separate proprietary ratings of fundamental and technical performance into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
In August 2018, Apple became the first company to reach a market value of over $1 trillion. Since it hit that milestone, Microsoft (MSFT), Amazon.com (AMZN) and Google-parent Alphabet (GOOGL) have joined it in the trillion-dollar club.
Apple stock was the first to gain a market value of over $1.5 trillion in early June. Amazon and Microsoft have since followed.
On Aug. 19, AAPL stock became the first to reach a market cap of $2 trillion. Longtime Apple analyst Gene Munster, managing partner at Loup Ventures, said Apple stock could reach a $3 trillion market cap sometime this decade.
AAPL Stock Technical Analysis
On April 29, Apple stock broke out of a second-stage cup-with-handle base at a split-adjusted buy point of 72.16, according to IBD MarketSmith charts.
The Dow Jones tech giant later passed a secondary buy point of 80.02 from a cup-with-handle base visible on a weekly MarketSmith chart. IBD Leaderboard analysis provided several additional buy points during its ascent.
On Sept. 2, Apple stock notched a record high of 137.98 on a split-adjusted basis in intraday trading. However, it ended the day down 2.1% amid a sell-off in technology stocks. AAPL stock closed the regular session on Oct. 14 at 121.19.
Is Apple Stock A Buy Right Now?
Apple stock is not a buy right now, but it soon could be. AAPL stock has been consolidating for the past seven weeks with a buy point of 138.08.
In a positive sign, Apple stock has jumped above its 50-day moving average line, where it had found support recently.
Keep an eye on the overall stock market, which has been unsettled lately. If the market turns south, don’t try to fight the general stock market direction.