Why Apple is the only tech stock that’s up today

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  • Apple stock rose more than 2% on Tuesday, as industry stocks heeded concerns over the new Omicron Covid version, prompting investors to view the company as a safe haven during market uncertainty.
  • Needham analyst Laura Martin said investors turned to Apple on Tuesday because the company has prodigious cash flows, allowing it to endure any slowdown in the economy and take advantage of falling prices.

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Apple stock rose more than 2% on Tuesday as the stock fell on concerns over the new Omicron Covid version, prompting investors to view the company as a safe haven during market uncertainty.

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Other large market cap tech stocks such as Google, Amazon, Meta (formerly Facebook) and Microsoft are down for the day amid a broad market sell-off. The Dow Jones Industrial Average dropped more than 500 points, the Nasdaq Composite was down more than 1% and the S&P 500 was down nearly 1.4% on Tuesday.

Needham analyst Laura Martin told Businesshala that investors turned to Apple on Tuesday because the company has prodigious cash flows, allowing it to endure any slowdown in the economy and take advantage of falling prices.

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“There’s a flight to quality with companies that you know will weather the storm, won’t go bankrupt, won’t have a financial crisis,” Martin said, noting that other large-cap tech stocks don’t bottom like smaller firms. Huh.

Martin said Apple is ready to introduce new products, including headsets.

“The biggest criticism of Apple for the past five years is no new products. When you look at the product pipeline, there’s a lot of excitement, especially in the press today about how they’re going to introduce augmented reality glasses at the next WWDC. Going to do. June,” Martin said.

Martin said there are signs that Apple’s current products, particularly its iPhone Pro models, are selling well, potentially leading to a big December quarter for the company. Apple said in October that it expected record revenue in its first fiscal quarter, compared to last year’s sales of $111.4 billion, despite a supply crunch.

“There are great numbers coming from the retail sector in terms of how the products are selling. Tablets, especially the high-end iPhones, all of which they say will have higher margins and higher margins for the fourth quarter of this year. There’s going to be higher revenue,” Martin said.

Apple uses its cash flow to not only invest in new products but to return capital to shareholders through dividends and buybacks, the latter of which can help keep the stock price stable. And Bernstein analyst Tony Sacconaghi said in a note to investors earlier this month that he expects Apple to continue to repurchase shares over the next five years.

“Our analysis shows that Apple is likely to be able to continue to repurchase ~3–4% of its shares per year through the end of 2026, while increasing its dividend per share by 10% without incurring net debt on its balance sheet. increasing annually.” Sacconaghi said in a November 17 note to investors.

Apple shares are up about 25% for the year.

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