Here’s why Apple is a buy right now

The stock has bounced around over the past year-and-a-half, but going forward investors will want to own Apple (Apple Stock Quote, Charts, News, Analysts, Financials NASDAQ:AAPL), according to portfolio manager Paul Harris, who just named the American tech giant one of his Top Picks for the 12 months ahead.

“People worry about the headwinds against Apple, but I think they are transitory,” said Harris of Harris Douglas Asset Management, who spoke on BNN Bloomberg on Wednesday.

“Yes, they had some products coming into market where it was very difficult because of supply chain issues, but I think by the end of the year most of that will be gone,” he said.

Apple’s share price dropped to a multi-year low at the end of 2022, after supply chain issues related to its China production seem to come to a head, with demand over the Holiday Season outstripping supply. 

Like many businesses, the company has attempted to diversify away from China, where COVID lockdown policy was a big damper on production. The iPhone maker has said it’s looking more to other Asian jurisdictions like India to get its products made.

The market appears to have gotten the message, as the first quarter 2023 was very good for AAPL stock, which was up 27 per cent for the Q1.

For Harris, while the company continues to receive knocks over its reliance on hardware, investors shouldn’t be too concerned, as both Apple’s products and services are doing fine.

“What you have to really concentrate on is their wearables business and their service business. Services can easily be a $130 billion business by 2026, and the wearable business [could be] at $70 billion by the same period,” he said. “And people forget Services is a very high margin business, which [is] helpful taking out the cyclicality of the hardware business.”

“Apple’s got a great balance sheet, they buy back their shares and they’re in a very good financial shape,” he said.

Apple missed estimates in its latest reported quarter, the company’s fiscal first for 2023 for the period ended December 31, 2022. Services revenue was a record at $20.8 billion but Products fell from $104.4 billion a year ago to $96.4 billion. EPS was $1.88 per share compared to $2.10 a year earlier. Analysts had been expecting revenue of $121.1 billion and EPS of $1.94 per share.