Apple’s stock is still a good buy, this portfolio manager says

Along with its FAANG friends, Apple (Apple Stock Quote, Chart NASDAQ:APPL) has done well over the first quarter of 2018, and while the name isn’t really the growth story it once was, there’s still good value in owning Apple, says Cameron Hurst, chief investment officer at Equium Capital Management.

For more than a few years now, the scuttlebutt on Apple has been that the tech giant has become too reliant on its iPhone sales to drive revenue growth and that the company’s glory days of leading tech innovation are now a thing of the past.

On that front, Apple management made news in January when it lowered its quarterly revenue guidance due to weak iPhone sales in China, while just this week, investment bankers Credit Suisse initiated coverage Apple with a neutral rating, saying that it expects iPhone sales to decline by 12.4 per cent in 2019, speeding up the drop-off witnessed in 2018 where sales fell 3.2 per cent.

But all is not gloom and doom, says Hurst, who likes the company’s moves towards diversification.

“It’s a leader in the hardware and it continues to do really well. The move to 5G is not expected to prompt as much upgrade as from 3G to 4G and LTE, so the handset market, we know it’s getting more mature,” said Hurst, to BNN Bloomberg on Wednesday.

“[But] at the end of the day, it’s still Apple,” he says. “They still the brand power, they still have good technology, they’re going out into wearables and, as far as we can tell, they’re leading in the augmented reality space. [Augmented reality] is an exceptionally powerful tool and we’re just tapping into that, and Apple have set themselves up really well for that, in a very discreet way.”

Ahead of Q2 financials due on April 30, Apple last reported in late January when its fiscal first quarter brought in $84.3 billion, a five-per-cent decline year-over-year, while profit declined marginally for the October to December quarter to $20 billion. (All figures in US dollars.)

APPL finished 2018 down 6.8 per cent but the stock has climbed 27 per cent since the start of 2019. Hurst says that Apple’s chart is now looking particularly good.

“They’re doing what they do and they’re aligning well. You just have to understand that this is a big, honking mature company and you’re just not going to get the punch out of it that you did in the past. You want other parts of your portfolio for that,” he says.

“But in terms of the hardware, they’re putting up the numbers, they’re moving into services, they’re doing all the right things. Technically, it’s about to break out again, so we think it’s fine,” Hurst adds.