Apple’s iPhone is often a buyer’s dream

Apple Inc.’s iPhone debuts. have historically been an event to sell stocks, but the following weeks often provide an even better opportunity to buy the dip. (Follow Apple Launch Event LIVE here)

People stand outside an Apple store (AFP)
People stand outside an Apple store (AFP)

September was Apple’s worst month of the year over the past five years, with the stock down 4.5% on average, compared with a 3.2% drop for the S&P 500. Meanwhile, October was one of the best, with an average gain for Apple of 3.8% over the same period.

“If you’re a long-term holder and you see this as a consumer products company, those pullbacks are opportunities,” said Gene Munster, managing partner and co-founder of Deepwater Asset Management.

​​​​​​While stocks usually rise in the months leading up to the event, this year’s run has been lackluster. Apple shares fell in August after a disappointing earnings report, and the slide has continued this month amid concerns about government restrictions on the iPhone in China, its biggest international market. In total, Apple lost nearly $300 billion in market value after its record close on July 31.

According to Jason Benowitz, senior portfolio manager at CI Roosevelt Private Wealth, concerns about China and the seasonality of iPhone-related events were compelling starting points.

“The US and China need Apple to create jobs and prosperity for their countries,” he said. “These fundamental facts have not changed in recent media reports, and we expect Apple to be successful in China for many years to come.”

Apple’s event will begin at 10 a.m. on Tuesday in California, and will feature the iPhone 15 lineup, as well as the next-generation watches and AirPods. The iPhone lineup will include two entry-level models and two high-end models, according to Bloomberg News.

Of course, Apple isn’t the only megacap stock under pressure. The Nasdaq 100 stock index fell more than 2% from its peak in July amid rising Treasury yields and signs that the Federal Reserve is willing to keep interest rates higher for longer. Tesla Inc. and Microsoft Inc. have fallen more than 5% since the July 18 peak. Even chip maker Nvidia Corp. decreased by 4.9%.

Despite the pullback, Apple shares are up 38% this year. The stock trades at 27 times forward earnings, down from a high of 30 times in July, but well above the average of 18 times over the past decade.

Apple needs a boost after three consecutive quarters of declining revenue. Analysts on average expect the company’s annual revenue to rebound in 2024 after falling about 2.9% this year, according to data compiled by Bloomberg. That will be helped by firm price increases on its higher-end models, said Angelo Zino, senior analyst at CFRA Research, adding that would be a positive catalyst for the stock.

The recent performance “has hopefully set the stage for a rally in October and the end of the year,” said Ken Mahoney, chief executive of Mahoney Asset Management.

“I think we need to get through September, which was obviously very volatile,” he said. “I’m an Apple bull, let’s put it out there, horns and all.”

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