Following big gains for many tech stocks in 2020, lots of these equities have fallen sharply from highs earlier this year. This retracing, of course, may make sense for some tech stocks, as some companies' valuations were likely getting ahead of themselves. But some of them -- particularly shares of the high-quality tech stocks with strong competitive advantages -- may be oversold.

One example of a stock that looks like a good buy after its sell-off is Apple (AAPL 0.02%). Don't be fooled by its gargantuan $2.1 trillion market capitalization. This dominant tech company's stock still has room to run.

Apple devices and a TV displaying the Apple Fitness+ app

Apple Fitness+. Image source: Apple.

Impressive growth

Apple's most recent quarterly results highlight the company's broad-based strength -- and why investors should have the tech stock on their radar. In fiscal Q1 (the three-month period ending Dec. 26, 2020), Apple saw double-digit year-over-year growth rates in every product category. In addition, Apple achieved record revenue in every one of its geographic segments. 

In total, revenue for the period was $111.4 billion, up 21% year over year. Earnings per share jumped 35% year over year to $1.68.

Meanwhile, the company has garnered a massive base of active users across its devices. In the company's fiscal first-quarter earnings call, management said it now boasts over 1.65 billion active devices. "We hit a new high watermark for our installed base of active devices, with growth accelerating," management said.

Workers prepare iPhone 12, iPhone 12 Pro, and iPad Air for shipment at Apple’s distribution center in Carlisle, Pennsylvania.

Apple distribution center in Pennsylvania. Image source: Apple.

Monetization of this lucrative user base can be seen in Apple's services segment, which generated $53.8 billion in revenue in fiscal 2020 -- up 16% year over year. This segment importantly garners an impressive gross profit margin of 68%.

Apple stock is worth its premium valuation

Of course, with many tech stocks coming down in recent weeks compared to levels seen earlier this year, some investors may be nervous about taking a stake in Apple. They may be wondering if this is just another overvalued tech stock. After all, the company's price-to-earnings ratio of 34 doesn't exactly sound like a bargain.

However, Apple has strong competitive advantages, putting it in a position to continue growing its active installed base in the coming years. After years of delivering quality hardware, software, and services to its customers, the company has earned strong brand power and customer loyalty. This, in turn, has led to impressive pricing power. The company's iPhone, iPad, Macs, and AirPods, for instance, all sell for prices much higher than the average prices of smartphones, tablets, computers, and headphones from many of its competitors.

Further, Apple has shown no signs of losing its pricing power. Indeed, the prices of its most expensive iPhones have steadily risen in recent years. For instance, the company recently released a pair of $549 headphones -- and demand has exceeded supply.

With shares down 15% from an all-time high earlier this year, now's a good time for investors to consider taking a stake in this top-notch tech stock. While volatility should be expected, Apple's strong recent business performance and unmistakable pricing power suggest there's more robust business performance in store for the tech giant and its shareholders over the next 10 years.