Apple (AAPL) just unveiled two new iPhones, but neither were enough to impress Wall Street. AAPL stock slid over 5% Wednesday to below $500 a share once again, and the megacap tech stock shed about $35 billion in market cap as a result.
But is this Apple stock decline just another buying opportunity?
I say yes.
I don’t particularly think the new iPhone 5S is going to juice the upgrade cycle significantly and agree that the iPhone 5C is probably still too pricey. In that respect, analysts at Bank of America (BAC), UBS (UBS) and Credit Suisse (CS) were right to express disappointment in AAPL stock on that front.
And don’t forget that as David Goldman of CNNMoney pointed out recently, historically speaking, AAPL shares typically end up lower a month after the release of a new iPhone — classic buy the rumor, sell the news behavior.
But don’t forget that most bullish arguments for Apple are not made by traders who see something glorious in AAPL stock charts or a rumor with massive potential. It’s all about the long-term potential — the 2.6% dividend that is less than 30% of FY2014 earnings with plenty of room to grow, a massive cash stockpile and dominant brand and valuation that is at worst fair and at best cheap based on a forward price-to-earnings of 11.
Remember, BlackBerry (BBRY) is in its death throes, and Windows Phone from Microsoft (MSFT) is still lagging woefully behind in market share. And while Google (GOOG) is dominant with its Android OS, its hardware is still far behind AAPL when it comes to sales and profits; consider the recent Moto X is shipping at a somewhat slow rate despite high hopes for the long-awaited synergy between Google software and Motorola hardware after the big-time buyout a few years ago.
Apple is hardly threatened domestically, and continues to gain momentum internationally. Just this week we learned that Apple inked a big deal with China Mobile (CHL), a massive Chinese telecom, that could dramatically increase market share there.
There clearly are challenges for AAPL stock in the short-term, including sentiment and the general sense that innovation isn’t what it used to be at Apple.
But with a bulletproof balance sheet, a decent dividend and continued growth even amid negativity it’s hard to bet against Apple stock if you’re a long-term investor.
More on AAPL stock
- What a cheap iPhone means for China sales. (The Slant)
- Carl Icahn is buying more AAPL stock. (MarketWatch)
- Everything you need to know about Tuesday’s Apple event. (Wired)
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.