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Apple was the one tech stock that went up on Tuesday

Apple was the one tech stock that went up on Tuesday

December 2, 2021: -On Tuesday, Apple stock closed up 3.1% as other stocks tumbled on concerns of the new omicron Covid variant, which shows investors see the company as a haven in the market uncertainty.

Other large-cap tech stocks such as Google, Amazon, Meta, and Microsoft closed down for the day between a broader market selloff. The Dow Jones Industrial Average decreased 651 points, the tech-heavy Nasdaq composite fell 1.6%, and the S&P 500 was down nearly 1.9% on Tuesday after Federal Reserve Chairman Jerome Powell said the Fed would discuss speeding up the bond-buying taper in its December meeting.

On Tuesday, Needham analyst Laura Martin told CNBC that investors turned to Apple because the company has prodigious cash flow, which allowed it to endure any slowdowns in the economy and take advantage of falling prices.

“There’s a flight to quality with companies that you know will weather the storm, not go bankrupt, not have financial distress,” Martin said, which noted that other large-cap tech stocks aren’t down like smaller firms.

Martin added Apple is positioned to introduce new products to further power growth, including a headset.

“The biggest criticism of Apple for the previous five years is no new products. When you look at the product pipeline, lots of excitement there, especially in the press today about the way they’re going to introduce augmented reality glasses at the coming WWDC in June,” Martin said.

Martin said there are indications that Apple’s current products, and its iPhone Pro models, are selling, potentially leading to a big December quarter for the company. Apple said it expected record revenue in its fiscal first quarter, over last year’s $111.4 billion in sales, despite supply constraints.

“Lots of excellent numbers coming out of retail about how the products are selling. Tablets, especially the high-end iPhones, saying they’re going to have high margins and high revenue for the fourth quarter of this year,” Martin said.

Apple uses its cash flow not to invest in products but to return capital to shareholders through dividends and buybacks, the latter of which can help keep the stock price stable. And Bernstein analyst Toni Sacconaghi said in a note to investors that he expects Apple to continue repurchasing shares for the five years.

“Our analysis suggests that Apple is to be able to continue repurchasing ~ 3-4% of its shares each year on 2026 while growing its dividend per share by 10% without taking on net debt on its balance sheet,” Sacconaghi said in a November 17 note to investors.

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