Stocks to buy

AAPL Stock Forecast: Surprise! Why Apple Is In Better Shape Than People Realize.

Despite some ongoing concerns, according to my Apple (NASDAQ:AAPL) stock forecast there are still plenty of reasons to buy. Questions continue to surround Apple, some of which were not answered by the company’s recent fourth-quarter financial results.

Sales of the company’s legacy technology products, such as its iPhone and MacBook computer, remain tepid, and it’s not yet known how its new augmented reality headset will fare with consumers. But these questions don’t take away from the fact that Apple remains one of the best stocks investors can hold in their portfolio.

A Strong Quarter

There was a lot of nail-biting when Apple issued its Q4 2023 print. Analysts and media zeroed in on the fact that Apple’s iPhone sales in China declined 13% in the October through December quarter.

Home to its main iPhone manufacturing plant, and with 20% of its global iPhone sales coming from China, the nation of 1.4 billion people remains strategically important to Apple. However, all the handwringing over China obscured some very strong results from the company.

Apple’s revenue rose 2% year-over-year in Q4, ending four consecutive quarters in which the company’s annual sales declined. Apple’s gross margin came in at 45.9% versus 45.3% that was forecast.

Despite a decrease in China, iPhone sales globally totaled $69.70 billion, beating Wall Street forecasts of $67.82 billion. It was the company’s first full quarter of iPhone 15 sales. Revenue from the MacBook computer also came in ahead of estimates at $7.78 billion.

In fact, Apple’s consumer electronic devices showed sales growth in all regions of the world except for China, which is undergoing an economic slowdown and where Apple faces growing competition from domestic smartphone makers such as Huawei.

But overall, Apple produced very strong results, beating analysts’ estimates on both the top and bottom lines. Management said they expect iPhone sales in the current first quarter to be similar to last year’s $51.33 billion, and that its services should grow 11%.

The New Headset

The day after Apple’s Q4 print, the company’s new Vision Pro mixed-reality headset went on sale around the world. Reviews of the device have been positive. This is Apple’s first entirely new electronics product since 2015, and pre-orders were so strong that Apple moved up the launch date to February from a previous schedule of late spring.

While some analysts have taken issue with the Vision Pro’s price of $3,499, reviewers seem to agree that the headset is worth the expense.

The Vision Pro’s global sales will be included in Apple’s next earnings report and should help counter any slowdown in sales of its iPhone or other devices.

In recent days it was reported that Apple’s manufacturing facilities in China have increased production of the Vision Pro to meet growing demand.

Apple is also working with software developers to create apps that can be used with the augmented reality headset. Analysts are forecasting 200,000 to one million unit sales of the device this year.

Prioritizing the Shareholder

Outside China, Apple’s business continues to fire on all cylinders. But even in China, Apple is managing the situation as best it can. In mid-January, Apple announced discounts on its devices to spur sales, including knocking the equivalent of $70 off its iPhone 15.

The company is also moving its manufacturing out of China and to low-cost centers such as India. Other U.S. companies ranging from Nike (NYSE:NKE) to Starbucks (NASDAQ:SBUX) have also run into trouble in China and are pulling up stakes.

At the same time, Apple continues to prioritize its shareholders. In Q4 2023, Apple spent nearly $27 billion on dividend payments and stock buybacks.

The company continues to buyback more of its own shares than any other publicly traded company. It’s also one of the few mega-cap technology companies that pays a dividend. And AAPL stock continues to appreciate, rising 25% in the last 12 months, bringing its five-year gain to 345%.

Buy AAPL Stock

Apple’s future outlook and growth are being questioned, but its current problems are mainly in China. Outside that country, Apple remains a strong brand and continues to post strong sales.

That its Vision Pro headset has just gone on sale should give the company’s earnings a jolt going forward.

There’s no question that Apple continues to provide solid returns to investors with its share price gains, dividend payouts, and stock buybacks. Anyway you look at it, AAPL stock is a buy.

On the date of publication, Joel Baglole held a long position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

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