Unsure which way the market is heading? The best advice is to stick with the proven winners, the secular growth names that will see you through to the other side of COVID-19. And with that in mind, fund manager David Burrows is looking at Apple (Apple Stock Quote, Chart, News NASDAQ:APPL).
“It’s clear that the leadership theme to this point, going into the crisis and coming out of the crisis, has been large cap secular growth. People are willing to pay for the predictability of a secular growth story and Apple of course fits that bill,” says Burrows, president and chief investment strategist at Barometer Capital, who appeared on BNN Bloomberg Thursday.
“Their services business continues to grow and we know that the launch of their next iPhone is probably going to be a little bit challenged, but in general I think that the businesses are operating extremely well,” Burrows said.
Apple took a breather this week as its share price fell along with much of the market after a dizzying display over the past couple of months, first with the huge market losses in February and March and then the impressive gains of April and early May.
Apple’s share price went from a low of $212 on March 23 to hit $319 on Tuesday of this week, pushing through quarterly results in late April that offered up more questions than answers on how the company will fare during the rest of the year.
Released on April 30, Apple’s second quarter fiscal 2020 ended March 28 featured revenue up one per cent year-over-year to $58.3 billion, with services revenue being a particular bright spot at $13.3 billion, a 16 per cent increase.
iPhone revenue dropped seven per cent to $28.96 billion, with more downside projected in the coming months.
“On iPhone and Wearables, we expect a year-over-year revenue performance to worsen in the June quarter, relative to the March quarter. On iPad and Mac, we expect the year-over-year revenue performance to improve in the June quarter,” said CFO Luca Maestri, in the Q2 press release.
Apple management withdrew guidance for the quarter ending in June due to the COVID-19 crisis and its uncertain impact but the company is nonetheless staying the course with its massive share buy-back, calling for an increase of $50 billion to the repurchase program, along with keeping its dividend running at about a one-per-cent yield.
As for Apple hardware, the company is still working on new product offerings including differently-sized iPads and iPad minis and an iPhone 12 expected this fall. Burrows said Apple’s consistency over the years will be its selling point to investors in the current climate.
“If you had to do one overlay as to the things that there appears to be appetite in the market for, it’s companies that have some predictability, and certainly as the services business grows inside of Apple it continues to get stronger,” Burrows said. “So, whether it’s Apple or Microsoft, these names are where the leadership still lies.”