In today's market, it's not easy to find a technology company performing at a high level, but Apple (AAPL -2.19%) continues to be one of the few to do so. The iPhone maker, which represents 40% of Berkshire Hathaway's (BRK.A -0.59%) (BRK.B -0.74%) investment portfolio, has outperformed financially of late despite shedding 16.7% of its value since the start of the year.
This has created a unique buying opportunity for shrewd investors -- at least that's what Berkshire Hathaway CEO Warren Buffett seems to think. The "Oracle of Omaha's" company bought $600 million worth of Apple stock during the first quarter of 2022, and I wouldn't be surprised to see the star stock picker scoop up additional shares if it continues to move lower in the coming trading sessions.
Should investors follow Buffett and purchase Apple stock right now?
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Apple's business is on the up and up
Apple delivered a strong outing in its second quarter of 2022, increasing both its top and bottom lines by 8.6% year over year, up to $97.3 billion and $1.52 per share, respectively. Profitability held up nicely as well, despite a range of macroeconomic headwinds -- its gross margin expanded 124 basis points to finish at 43.7%, and its operating margin increased 12 basis points to end at 30.8%.
But the real reason to consider investing in Apple right now -- and I think Buffett would agree -- is its superior balance sheet and cash-flow generation. As of its most recent quarter, the company boasts a cash and cash equivalents position of $28.1 billion. And the iPhone maker continues to generate cash at a red-hot pace, producing $105.8 billion in free cash flow (FCF) over the past year. For a business, having a lot of cash provides financial flexibility, which allows companies to invest in growth all while staying protected during economic downturns.
Apple is set to report its fiscal third-quarter earnings on Thursday, July 28. Wall Street analysts are expecting the tech behemoth to grow its top line by only 1.4% year over year, up to $82.6 billion, and its earnings per share to retreat 10.8% to $1.16. For the full year, however, the Street forecasts the company's top and bottom lines to expand by 7.6% and 9.3%, respectively. Not only are those solid growth rates for a business of Apple's magnitude, but the company's valuation is also starting to appear quite enticing. Today, its price-to-earnings multiple of 24.6 is inching closer to its five-year mean of 23.1. Whenever a top-notch stock nears its historical valuation, it's usually a wise idea for investors to take a look.
Should investors follow Buffett's lead?
Apple is a surefire play in today's market environment, in my opinion. Its steady financial performance, combined with its elite balance sheet and tumbling valuation, make it much safer than most technology stocks at the moment. The company has built an empire that has resulted in a wide moat and a remarkably durable business model, which is surely a key reason why Warren Buffett is invested so fiercely in the stock. Although it's important to do your own research, it wouldn't be unwise to follow Buffett's lead and purchase shares of the technology giant today.
