Apple stock: Jim Cramer’s ideal entry price and what to do

Apple released exceptional results for the first fiscal quarter last week. On the morning after the company’s earnings day, after discussing the highlights of the quarter, Jim Cramer, host of CNBC’s Mad Money, made a very specific comment about when to buy Apple stock. (AAPL) – Get the Apple Inc.:

“It was a remarkable quarter. Thus, the stock is at [$164]. My advice is if it breaks that price and goes down to, say, $163, then buy it.

The problem is that AAPL shares have already far exceeded the ideal post-earnings entry price of “Jimmy Chill”. Even the Facebook-led tech stock rout was not enough to push the AAPL well below $175 each.

Does that mean this ship sailed? Is it too late to own Apple stock at the current market cap of nearly $2.9 trillion?

Figure 1: Apple stock: Jim Cramer’s ideal entry price and what to do

(Learn more about Apple Maven: Apple Stock: 3 Key Earnings Day Topics You May Have Missed)

Jim Cramer’s bullish views

First, let’s understand what makes Apple a good stock to own from a company fundamentals perspective, according to Jim Cramer. He stated:

“It’s very clear that was about the most perfect number you could get. […] Supply issues eased as the quarter progressed, and this quarter is looking better. The number of subscribers, they have 785 million, [are adding] to service revenue – and there are no defaults, by the way. China was abnormally strong, [Apple is] a top 4 brand there.

Very few experts have deviated much from the consensus opinion that Apple was on fire. I agree with Jim that this was an exceptional report, if not flawless – the iPad struggled with difficult components and component shortages.

Of course, this particular CNBC discussion was too short for Jim Cramer to explore other reasons for owning AAPL. For example, I think there are huge revenue opportunities outside of Apple’s current line of products and services – think the Metaverse and self-driving vehicles. Additionally, margins should improve as supply disruptions ease and services become an even larger part of the revenue mix.

AAPL and the issue of price

On whether to buy Apple stock after earnings and in a weak market, especially for tech stocks, Jim Cramer added the following:

“If you believe there could be a return [in tech stocks]Apple is a legit place to start.

I think it’s a good catch. The stock market has been weak in 2022, but mainly due to an aversion to companies that lack short-term earnings and cash flow and rely too much on distant growth stories. Apple does not belong to this bucket.

Instead, the Cupertino company appears to be both a short-term success and a potential beneficiary of long-term growth trends. If investors want to invest their money in technology today, many would probably start with Apple.

But then there is the question of the share price and its valuation. Jim Cramer said AAPL was a buy at $163, but the stock never hit that low after booming profits. In fact, since hitting a recent low of $159 on Jan. 27, Apple stock has climbed 10% almost undisturbed.

Has the boat sailed?

Back to the key question: is it now too late to own AAPL? I do not think so. Of course, investors probably want to be able to buy Apple stock at Jim Cramer’s desired entry point of $163. But this opportunity was left in the rearview mirror.

Think about the big picture. AAPL has produced annualized returns of 32% in the iPhone era (i.e. since 2007). The 10% spike over the past few days doesn’t necessarily mean the stock’s long-term opportunity is gone. It may simply suggest instead that expectations of future earnings should be toned down slightly.

(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)

Eleanor C. William