Why Apple is the one tech inventory that is up in the present day

Apple inventory was up greater than 2% on Tuesday as shares tumbled on issues of the brand new omicron Covid variant, exhibiting traders see the corporate as a secure haven throughout market uncertainty.

Different giant market cap tech shares like Google, Amazon, Meta (previously Fb) and Microsoft are down for the day amid a broader market selloff. The Dow Jones Industrial Common dropped greater than 500 factors, the Nasdaq composite was down over 1% and the S&P 500 was down about 1.4% on Tuesday.

Needham analyst Laura Martin instructed CNBC that traders turned to Apple on Tuesday as a result of the corporate has prodigious money circulation, permitting it to endure any slowdowns within the financial system and make the most of falling costs.

“There is a flight to high quality with corporations that you recognize will climate the storm, not go bankrupt, not have monetary misery,” Martin mentioned, noting that different large-cap tech shares aren’t down as a lot as smaller companies.

Martin added Apple is positioned to introduce new merchandise to energy new development, together with a headset.

“The largest criticism of Apple for the final 5 years isn’t any new merchandise. While you take a look at the product pipeline, numerous pleasure there, particularly within the press in the present day about how they will introduce augmented actuality glasses on the subsequent WWDC in June,” Martin mentioned.

Martin mentioned there are indications that Apple’s present merchandise, particularly its iPhone Professional fashions, are promoting nicely, probably resulting in an enormous December quarter for the corporate. Apple mentioned in October it anticipated file income in its fiscal first quarter, over final yr’s $111.4 billion in gross sales, regardless of provide constraints.

“Numerous actually good numbers popping out of retail about how the merchandise are promoting. Tablets, particularly the high-end iPhones, all of which says they will have excessive margins and excessive income for the fourth quarter of this yr,” Martin mentioned.

Apple makes use of its money circulation not solely to put money into new merchandise however to return capital to shareholders by dividends and buybacks, the latter of which may help hold the inventory value steady. And Bernstein analyst Toni Sacconaghi mentioned in a be aware to traders earlier this month that he expects Apple to proceed repurchasing shares over the following 5 years.

“Our evaluation means that Apple is probably going to have the ability to proceed repurchasing ~ 3-4% of its shares per yr till the top of 2026 whereas rising its dividend per share by 10% yearly with out taking up web debt on its stability sheet,” Sacconaghi mentioned in a Nov. 17 be aware to traders.

Shares of Apple are up about 25% for the yr.