Apple Stock Dips in Market Sell-Off: Opportunity for Investors?

Apple Gets Caught Up in Market Sell-Off. Is It Time to Buy the Dip in the Stock? | The Motley Fool

Despite delivering solid fiscal third-quarter results at the start of the month, Apple (AAPL 1.37%) got caught up in the recent market sell-off. This tech-driven sell-off was accelerated by a small interest rate hike in Japan and the unwinding of the carry trade. Market corrections are unavoidable, and they can open up good buying opportunities. Let's look at Apple's most recent results to see if this is a stock investors should be scooping up on this market dip. After watching its revenue decline by 4% in fiscal Q2, Apple managed to increase it by 5% year-over-year, to $85.8 billion, for fiscal Q3, which ended June 29. That came in just above analyst expectations for revenue of $84.5 billion. Earnings per share grew 11% to $1.40, topping the $1.35 analyst consensus. Revenue for Apple's services segment, which includes its App Store and Apple TV, climbed 14% to $24.2 billion in the quarter. This segment carries much higher gross margins than the products segment, and its gross profits climbed 20% to $17.9 billion. Product sales, meanwhile, rose nearly 2% to $61.6 billion, while gross profits edged up more than 1% to $21.8 billion. iPhone sales declined by about 1% to $39.3 billion but came in slightly ahead of the $38.8 billion in sales that analysts had forecast. The company also said that sales rose on a constant-currency basis and that its installed iPhone user base hit "a new all-time high." iPad sales, meanwhile, saw a resurgence, climbing 24% to $7.2 billion on the back of the first new release of a tablet since 2022. The company said that about half of its iPad sales came from new users. Sales for wearables, home devices, and accessories -- the segment that includes the Apple Watch and AirPods -- rose 2% to $8.1 billion, while Mac sales rose 2% to $7 billion. About two-thirds of Apple Watch buyers and about half of MacBook Air buyers had never bought those items before. Check out some numbers from the most recent quarter in the table below. Data source: Apple. Mainland China continued to be a weak spot, with Apple revenue in the country down about 6.5%. However, the company said that its iPhone installed base hit a record high, while it saw a record number of users upgrade their iPhones in June. Looking ahead, Apple forecast that its fiscal Q4 revenue would see growth similar to the 5% of fiscal Q3. It also expects double-digit services revenue growth, as in the prior three quarters. Apple's services businesses continue to shine with consistent midteens revenue growth. While iPhone sales remain lackluster, the company has been able to nicely grow profits due to the high-margin nature of its services offerings. Meanwhile, the nice jump in iPad sales shows the impact a big product upgrade could have on the rest of its hardware business, including iPhone sales. As Apple continues to make strides in artificial intelligence (AI) with its Apple Intelligence offering, the introduction of a more substantial AI-powered iPhone upgrade could certainly help power hardware sales. Over the past few years, the upgrade cycle has slowed, as upgrades to the smartphone have been more incremental and investors are looking forward to something that will reverse that trend. From a valuation perspective, Apple stock trades at a forward price-to-earnings (P/E) ratio of just above 28 based on fiscal 2025 analyst estimates. Before COVID locked down the economy, the stock generally traded at a much lower P/E. While Apple's prospects are looking up due to the potential for an iPhone upgrade combined with the strength in its services business, the stock's valuation remains lofty after the jump in P/E multiple without a corresponding jump in growth. If the stock's valuation were to rerate back down to pre-COVID P/E multiples, there would be a lot of downside in the price from current levels. Given the sudden shakiness in the market combined with its current valuation, I would wait for more of a pullback in Apple shares before looking to buy or add to the stock. There are currently more attractively valued stocks among the so-called "Magnificent Seven" stocks to consider buying before Apple. Meanwhile, even longtime Apple shareholder Warren Buffett cut his large Apple stake nearly in half, taking some nice profits in the process.

2 Stocks to Buy In a Stock Market Sell-Off | The Motley Fool

Equity markets took a significant plunge on Monday, Aug. 5. Of course, that's no reason for long-term investors to panic. We are still technically in a bull market, and whether or not equities continue to dip, the drop might create opportunities to pick up shares of great stocks from the discount bin. Which corporations should investors consider investing in while they are down? Here are two worthy candidates: Apple (AAPL 1.37%) and Visa (V 0.17%). Find out why these two companies will likely be long-term winners regardless of what the market does in the short run. Apple's shares were down by about 5% on Monday. Though that doesn't sound like a lot, considering we are talking about a stock worth more than $3 trillion, that's tens of billions of dollars. Apple's performance has been somewhat volatile for much of the year. It did not perform well through the first five months due to several headwinds, including slow iPhone sales in China, disappointing financial results, an antitrust lawsuit, and its perceived failure to keep up with its tech peers in the artificial intelligence (AI) race. However, the company's shares have rebounded in the past couple of months, partly thanks to its AI-related announcements during its developers conference in early June. How will things evolve for the tech giant through the end of the year? No one knows for sure, and that's not a question of particular interest to long-term investors. The company's prospects, though, remain strong. That's what matters most. First, Apple's financial results have improved. In its latest reporting period, the third quarter of its fiscal year 2024, ended on June 29, Apple's revenue grew by 5% year over year to $85.8 billion. Its earnings per share (EPS) of $1.40 were up 11% compared to the year-ago period. Revenue from its high-margin services segment was up 14.1% year over year to $24.2 billion. Second, Apple showed that it isn't out of the AI race. The company's nifty new AI features -- which it dubbed Apple Intelligence -- will be available to iPhone users (starting with the 15 Pro) and several of its other devices. Apple has never sought to be first to market. It has a knack for taking existing technologies and adding its own spin on them. This slow and steady strategy has served the company well. Third, Apple has more than 2.2 billion devices in its installed base, which provides significant long-term monetization opportunities. Apple benefits from strong competitive edges, including switching costs (it's not easy to leave its ecosystem), one of the strongest brands in the world, and the network effect within its app store since the more app developers it has, the more attractive it is for customers, and vice versa. In short, though Apple might not grow as fast as it did in the last decade, it remains an excellent tech stock to buy and hold. Visa also fell along with the broader market on Aug. 5, but that aligns with the company's performance throughout the year. Visa has failed to keep up with broader equities since 2024 kicked off; its shares are currently up by just 0.32% year to date. Visa performance was largely driven by lower-than-expected consumer activity, which led to weak financial results. However, this is nothing to panic about. Visa's payment network helps facilitate credit card transactions. It earns a fee every time a consumer swipes a card bearing its logo. When consumer spending decreases, the stock will suffer. Despite this headwind, there remains significant whitespace for Visa to grow, as odd as that might sound at first. The company's business -- and branded credit cards -- might seem ubiquitous, but cash, check, and other forms of transactions it can eat up still account for a massive payment volume. The company recently estimated a $20 trillion opportunity. How does that compare to its current ecosystem? During its fiscal 2023 (ended Sept. 30, 2023), the company's payments volume of $12.3 trillion increased 6% year over year. So, if Visa can make solid headway and capture a large share of this $20 trillion opportunity, its financial results should continue to improve. And there are excellent reasons to think it can do exactly that. Visa has no notable competitors other than Mastercard. This duopoly is unlikely to be toppled anytime soon. The two companies benefit from a network effect. The more merchants within Visa's payment ecosystem, the more attractive it is to consumers. The reverse is also true. Yes, Visa will sometimes encounter issues like it has this year, and so will every company in existence. Considering the company's long-term prospects, though, Visa's performance this year represents an excellent opportunity to pick up its shares.