Great companies can offer long-term market outperformance. The downside? Investors often have to chase shares and buy near all-time highs. However, sometimes a company falls out of favor briefly and can make for a great buying opportunity.
Today, a great company with massive cash flow and profitability is slightly out of favor. It’s at a solid long-term entry point for buyers. And there are some uncertainties which, once cleared, will allow shares to move higher.
The company is consumer tech giant Apple (AAPL). Shares are down about 13 percent from their 52-week high.
Besides canceling its Apple Car project, the company has been hit with a number of regulatory fees in recent days, including a $2 billion one from European regulators over streaming rules.
Apple has now underperformed the S&P 500 by 10 points over the past year.
However, with its growing dividend and large share buyback program, the math heavily favors investors moving forward, even if the company’s growth slows.
Action to take: Investors may want to buy some shares now, and use any further downside in the coming weeks to add to the position.
Apple pays a 0.5 percent dividend, with a history of raising its payout gradually over time.
For traders, shares have sold off in recent weeks and are looking oversold in the short term. The August $200 calls, last going for about $3.15, could see mid-to-high double-digit returns on a rebound through the summer.
Disclosure: The author of this article has a position in the company mentioned here, and may further trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.