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A Good Reason To Buy Apple Stock in December

The last month of the year has begun. Is this a good time to buy Apple stock? From a seasonality and historical trend perspectives, the answer may be yes.

Apple stock  (AAPL) - Get Free Report is still trying to shake off the most recent wave of bearishness triggered by the supply issues in China. Share price remained stable around $150 for a couple of weeks before sinking to the low $140s in the past couple of trading days.

Now, we enter the last month of the year. Could the recent rout be an opportunity to buy Apple shares in December and, maybe, ride the wave higher heading into 2023?

Figure 1: A Good Reason To Buy Apple Stock in December

Figure 1: A Good Reason To Buy Apple Stock in December

Read also: Will iPhone 14 Troubles Drag Apple Stock in December?

Apple’s Q1 Could Disappoint

Fundamentally, I fear a bit for AAPL’s short-term prospects. The newsflow coming out of Asia has been discouraging, even if the lockdown in “iPhone City” has just been lifted. I think that Apple’s fiscal Q1 results are at risk of disappointing relative to current estimates.

Of course, it is possible that the holiday quarter earnings risk has already been discounted in the share price. Apple stock has pulled back 7% in the past month alone (as of November 30 midday), while the S&P 500 (SPY) has climbed 3% during the period instead.

Apple Stock: History Is On Its Side

From a seasonal perspective, on the other hand, AAPL investors have reasons to be more optimistic.

The chart below, provided by Stock Rover, shows how Apple stock has historically performed much better in the December-to-January timeframe than in any other two-consecutive-month period: average of 17% gains per month.

Figure 2: AAPL's average monthly return (seasonality)

Figure 2: AAPL's average monthly return (seasonality)

The most plausible rationale is that investors “sell the news” of Apple’s new iPhone launch and holiday shopping season in October – Apple’s worst month of returns, historically. From there, a coiled-spring effect pushes share price higher in the following several weeks, while bullishness gradually dies out starting in February.

If the historical trend repeats this time, especially considering that AAPL has been down quite a bit in 2022 already, we could be looking at sizable gains in the next couple of months.

Speaking of historical trends, also keep in mind that buying Apple stock during a correction has consistently led to much better-than-average returns in the long run.

The chart below shows that, following a pullback of more than 15% from peak levels (which is where AAPL currently sits), average 12-month forward returns have been a decent 5 to 6 percentage points better than what the traditional buy-and-holder has been able to produce investing in Apple shares.

Figure 3: Average one-year return on AAPL, by strategy.

Figure 3: Average one-year return on AAPL, by strategy.

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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting the Apple Maven)