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It is worth mentioning that the impressive stock growth of Apple is not just hinged on its share price surge, rather, the company has booming retail sales that are fueling its enviable cash flow.
The concerns being peddled by the Omicron variant of the coronavirus have left many growth shares in the red, except for Apple Inc (NASDAQ: AAPL) stock. The tech giant’s shares traded up 3.16% up on Tuesday to $165.30, an uptrend that is currently being sustained in the after-hours session.
Major market indices traded down with the S&P 500 (INDEXSP: .INX) plunging 1.90% to 4,567.00. The Dow Jones Industrial Average (INDEXDJX: .DJI) slipped 1.86% to 34,483.72 and the tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) dropped lower to 15,537.69 atop a 1.55% loss. With tech stocks taking the heat across the board, the potential for these indices to have traded positively was quite low.
Apple’s growth did not come by chance as Needham analyst Laura Martin is convinced that the turn to the Cupertino-based company’s stock is because of the firm’s steady cash flow, a factor that is significant in helping it maintain stability irrespective of the economic strain Omicron might stir in the near future.
“There’s a flight to quality with companies that you know will weather the storm, not go bankrupt, not have financial distress,” Martin said, adding that the company’s outlook is even more enhanced with the fact that it is planning to launch a series of new products including a headset very soon.
“The biggest criticism of Apple for the last five years is no new products. When you look at the product pipeline, lots of excitement there, especially in the press today about how they’re going to introduce augmented reality glasses at the next WWDC in June,” Martin said.
Late last month, top analyst Ming-Chi Kuo of TFI Asset Management said the proposed Apple glasses which are on track to be launched next year will be as powerful as its Mac laptops. These positive indications have all formed a part of the sentiments that pushed investors to stack up on the stock overnight.
Apple Stock Growth and Implications for Growth
It is worth mentioning that the impressive stock growth of Apple is not just hinged on its share price surge, rather, the company has booming retail sales that are fueling its enviable cash flow. Despite recording a record sale of $111.4 billion at the same period last year, the company is certain it will beat these numbers this time around.
“Lots of really good numbers coming out of retail about how the products are selling. Tablets, especially the high-end iPhones, all of which says they’re going to have high margins and high revenue for the fourth quarter of this year,” Martin said.
A major use of its excess cash flow is to finance the repurchasing of its shares from some of its existing investors. The firm is set to make such repurchases at a rate of 3-4% per year up to 2026, a move that is going to help keep the price of the shares stable in the long term.