Apple Stock (AAPL) – Get a free report still trying to shake off the latest wave of declines triggered by supply issues in China. The stock price held steady around $150 for a few weeks before dropping to lows of $140 over the past two trading days.
Now we are entering the last month of the year. Could the recent rout be an opportunity to buy Apple stock in December and, perhaps, ride the wave as we approach 2023?
Read also: Will iPhone 14 issues drag down Apple Stock in December?
Apple’s first quarter could disappoint
Deep down, I’m a bit worried about AAPL’s short-term prospects. The news flow from Asia has been disheartening, even though the lockdown on “iPhone City” has just been lifted. I think Apple’s fiscal first quarter results are likely to be disappointing compared to current estimates.
Of course, it’s possible that the earnings risk of the holiday quarter has already been discounted in the stock price. Apple stock is down 7% in the past month alone (as of midday Nov. 30), while the S&P 500 (SPY) instead climbed 3% over the period.
Stock Apple: history is on its side
From a seasonal perspective, however, AAPL investors have reason to be more optimistic.
The chart below, provided by Stock Rover, shows how Apple stock has historically performed much better in the December-January period than in any other consecutive two-month period: an average of 17% gains per month.
Figure 2: Average monthly return of AAPL (seasonality)
StockRover
The most plausible rationale is that investors are “selling the news” of Apple’s new iPhone launch and holiday shopping season in October – Apple’s worst month for returns, historically. From there, a coil spring effect pushes the stock price higher over the following weeks, while the uptrend gradually dies out from February onwards.
If the historic trend repeats itself this time around, especially since AAPL has already fallen significantly in 2022, we could be looking at some sizable gains over the next two months.
Speaking of historical trends, also keep in mind that buying Apple stock during a correction has always led to returns well above the long-term average.
The chart below shows that following a pullback of more than 15% from peak levels (where AAPL currently sits), the 12-month average futures yields were 5 to 5% higher. 6 percentage points to those of traditional buying and selling. Holder was able to produce invest in Apple shares.
Figure 3: AAPL’s average one-year return, by strategy.
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(Disclaimer: This is not investment advice. The author may own one or more stocks mentioned in this report. Additionally, the article may contain affiliate links These partnerships do not influence editorial content. Thank you for supporting Apple Maven)
