Don't Be Surprised If Apple Has a Huge Year in 2022

Apple (AAPL) stock is one of the most interesting names in the market right now.

Down nearly 10% so far in 2022, Apple has long been one of the best growth stocks on Wall Street. Its line of devices – the iPhone, the iPad, the Apple Watch – changed how we integrate technology into our daily lives.

Lately, however, Apple’s been less of a growth stock and more of a drag on your portfolio. Supply chain issues, a lack of innovative products and the aftermath of the Covid-19 pandemic all contributed to depress Apple shares.

Despite recent performance, I have high hopes for AAPL as we head into the second quarter of 2022. I think the Cupertino, California-based tech giant could still have a solid - if not impressive - second half of the year.

And if you’re thinking about buying AAPL shares right now, you’ve got to be pretty excited. Apple stock is selling at a discount these days, but I don't think that’s going to last for long.

AAPL Stock at a Glance

Apple last posted earnings on Jan. 27, for its fiscal first quarter that ended Dec. 25, 2021.

Revenue of $123.95 billion was an increase of 11% from the same quarter a year ago. It also beat Wall Street estimates of $118.66 billion.

Earnings per share also was a happy surprise, coming in at $2.10 for the year. Analysts had expected only $1.89 per share in earnings.

Revenue from iPhones was a big winner, reaching $71.63 billion versus estimates of $68.34 billion. Apple Services, which includes the App store and Apple TV, came in at $19.5 billion, or 15.7% of total Apple sales.

And revenue from the company’s Mac computers was at $10.85 billion, while analysts had projected $9.52 billion.

And happily for shareholders, Apple continued to provide plenty of value. The company announced a fourth-quarter dividend of 22 cents per share. And it also bought back nearly $20.5 million in shares in the quarter.

While priced at $161 at this writing, 38 analysts who cover AAPL stock set a consensus price target of $193.53. That projected upside nearly 20%, which could catch the attention of any investor. 

Why Analysts Love Apple Right Now

The biggest thing that Apple has going for it this year, in my opinion, is the massive opportunity it has with its newly announced iPhone SE. While iPhones typically break the bank, Apple’s new iPhone SE is priced at $429. (Remember, the iPhone X was priced at $999.)

It includes a 4-7-inch display, TouchID fingerprint technology and a rear camera. And most importantly, it has 5G technology that smartphone shoppers are clamoring for these days.

What makes 5G so interesting? Well, 5G phones will allow you to use the internet as if you were connected to a landline or WiFi. You’ll be able to do anything from stream videos, participate in video calls, have a telemedicine appointment or anything else that requires stable, streaming high-speed service.

Analyst Amit Daryanani says sales of the iPhone SE could help Apple generate $20 billion in sales this year alone. Daryanani projects that people who have been holding on to their older smartphones will jump at the chance to get a new iPhone SE because of the price and the 5G technology.

Wedbush analyst Dan Ives was even more bullish. He said particularly as the Federal Reserve outlined its plan for interest rate hikes for 2022 and 2023, investors can now plan accordingly and start buying undervalued tech stocks like Apple.

“We view Apple as both a Rock of Gibraltar defensive tech name as well as the best 5G tech play in the market with a massive product cycle that is gaining more steam along with its valuable services business which is being undervalued by the Street in our opinion,” he wrote in a note to clients. “We believe Apple will be a $200 stock again in 2022 as the Street better appreciates the growth story playing out globally despite supply chain issues.”

The Bottom Line

With a forward price-earnings ratio of less than 26, I think Apple is a relative bargain when you consider what you’re getting with the stock. 

The company has positioned itself to have a huge 2022 as iPhone SEs continue to fly off the shelves. The company’s App store and AppleTV lines are solid, consistent revenue drivers. And I expect even the iPad sales, which faltered a bit in the last quarter, to begin bouncing back this year.

With a market capitalization today of $2.53 trillion, I wouldn’t be surprised if Apple approached the $3 trillion mark on the strength of its iPhone SE sales. 

Apple stock is definitely worth considering.