Apple (AAPL) is offering an attractive buying opportunity to many investors despite tough trade talk and analyst downgrades contributing to the stock's sustained fourth quarter fall.
Shares have slipped over 20% in the fourth quarter so far and continue to trend downward on Tuesday after President Trump placed the company in the cross-hairs of his caustic commentary. Shares were down nearly 1% to $173.09 as of 1:05 p.m. ET.
The dip is not one to be lamented by many market watchers however, as many are instead lauding a buying opportunity for the stock amid the encroaching, or already arrived, bear market.
"We believe AAPL's current stock price creates an attractive entry point for investors to benefit from its ability to generate revenue and EPS growth in fiscal year 2018," RBC Capital Markets analyst Amit Daryanani wrote in a note on Tuesday. "We believe the fundamental reality remains that AAPL's valuation is materially sub-par to what we anticipate is its long-term revenue and EPS potential."
Apple is the best cash cow ever created. Has a huge moat and gives all its profits back to shareholders. Trades at 15 PE and loaded with $150bil of net cash. $aapl
— Ross Gerber (@GerberKawasaki) November 27, 2018
The company's low price to earnings ratio has been seen as indicative of an opportunity to play the technology sector effectively into 2019, making the stock a safer investment as high-flying growth stocks fall to earth as bears begin to control the market.
The long-term thesis for the iconic company remains very much intact for longer term investors as well, Warren Buffett among them. Buffett's Berkshire Hathaway (BRK.A) (BRK.B) is currently the second largest shareholder after adding to its position in the third quarter.
The market value of the Omaha, Nebraska-based conglomerate's Apple investments currently stand at a whopping $57.9 billion according to FactSet.
Patience is a Virtue
That said, there may be more room to fall before an ideal entry point is identified.
Jim Cramer's Action Alerts Plus team own the stock for the charitable trust and are continuing to hold shares as they ascribe a longer term bullish outlook to shares of the company. However, the team is not adding to its position yet, as a bottom has yet to form in their view.
"For those who already own shares as we do, we continue to believe that AAPL is a stock to be owned, not traded," the team advised in a note on Friday. "We are not yet calling a bottom. We need to see sentiment shift and believe it better to pay for more knowing a base has put in than try to catch the absolute bottom."
Jim Cramer reiterated that there remains too positive a sentiment on Wall Street for a bottom to have formed in his daily rundown at the NYSE on Tuesday.
"Until we get convincing downgrades, there's still too many analysts that like it, it's hard to form a bottom," he told TheStreet's Katherine Ross. "You need to see some analysts panic."
So, paradoxically, investors may need for others to lose faith before placing their own in Apple.
"Prices are oversold and potentially bearish news on AAPL is front and center on financial websites," Real Money's technical analyst Bruce Kamich noted. "A lower open and higher close would be bullish."
So far, shares have simply retreated, adding to the monotonous move downward investors have endured for months.
