Apple remains the investors’ top pick as factories get back up to speed

It’s a time when luxury, high-end electronic goods might not be right at the top of most priority lists. As a result, it should come as no surprise that Apple has seen some dramatic and sometimes worrying price fluctuations over the past few months. Yet throughout it all, AAPL has remained a buy stock. Now, the firm has received a further boost, with positive noises coming from Morgan Stanley.

A stark financial backdrop

When looking at Apple’s potential performance over the coming months, we need to view it in a global context. On the macro level, things still need to bottom out, and there is talk of a $20 trillion recession to come.

Of course, the depreciation of the global economy has been exacerbated by the Covid-19 outbreak, with the implementation of social distancing measures and widespread lockdowns causing mass unemployment and slashing national GDPs throughout the world. You can view more detailed information in the following infographic. However, Apple could be in a better position to withstand it than most, and this is what is keeping the likes of Morgan Stanley positive.


Celebrating a six percent drop

Since the market hit its 2020 peak in mid-February, the AAPL price has dropped by six percent. That might not sound like cause to pop the champagne corks, but it represents a far shallower drop than most tech firms. Furthermore, it means Apple has outperformed the S&P 500, which shows an overall drop of around 17 percent.

It was more than enough to ensure Apple remained among the top picks published by Morgan Stanley analyst Katy Huberty last week. Huberty said the revenue guidance for Q2 that will be published next week is likely to be stronger than most have been predicting.

Production back up to speed

So why the relatively upbeat outlook given the global situation? To find the answer, we need to look to China, and specifically to the clouds of pollution that were hanging over its industrial regions on Earth Day. These are a stronger indication than any spin-laden announcement from the industry or politicians that production is returning to normal in the Chinese mainland.

That is the factor that will make or break Apple’s fortunes in 2020. A new iPhone is always going to be big news, and with all that has been happening in recent weeks, people have formed closer bonds with their mobile tech than ever. Yet there were genuine concerns a month or so ago that the shutdown in China would make it impossible for Apple to stick to its planned November launch due to supply chain issues.

The picture will become clearer when Apple releases its earnings report at the end of the month. However, Hubert is confident as to what will it will say. In her latest Morgan Stanley release, she wrote that she believes “Apple will continue to benefit” from its position at the top of the quality tree in what will remain a highly uncertain market environment.