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Technical view: Apple Inc. (AAPL)

Technical view
 

AAPL is in stage #2. While all the “technical gurus” on CNBC were recommending selling Apple because it was technically doomed to go down when it approached the downward sloping trend line, the stock defied them all and kept rising, so I hope you were not listening to them and kept buying. The stock broke above that “magical line” and continued up. The stock is now approaching its all-time high price, so get ready for another wave of “TA gurus” on CNBC telling you why this is the time to sell. Although there may be a dip at that resistance level as weak hands will start selling getting out break even, eventually, that dip will be bought and the stock will go higher.

 
Technical view weekly
 

One reason all the bearish gurus will tell you to sell would be a dip in earnings, but they are looking at the short term, not long-term trend. Apple is no longer a device manufacturer. They are in staples industry now (their main revenue comes from all sorts of subscriptions and services revolving around the phones and not from selling the phones themselves). As Warren Buffett recognized this five years ago, people are now addicted to iPhones and if they have to choose between a new car or iPhone, they buy iPhone. And Apple does everything it can to keep people addicted. Just look at their latest savings account effort. So Apple’s revenue may be down this quarter, but it is rising long-term:

 
Technical view weekly
 

Company’s free cash flow is also showing a growing trend. There are dips and spikes on quarterly basis, but long-term trend is clearly up:

 
Technical view weekly
 

The same can be said about earnings:

 
Technical view weekly
 

Apple raised a lot of debt between 2013 and 2017 and again between 2020 and 2021 but started retiring that debt since. If the trend continues this will be a good sign.

 
Technical view weekly
 

Apple is paying dividends and the company increases it by 4.35% on annual basis. A 5-year average growth is 5.63%. That is also good:

 
Technical view weekly
 

But the biggest deal is shares buybacks. Apple is retiring shares outstanding on a very rapid speed. Their buyback rate is at 4.72% 5-year average (or 3% annually). They are now at the level last seen in 2000.

 
Technical view weekly
 

Apple is undervalued based on its recent EPS estimates. It trades at the average P/E valuation, but its expected fair value is way above the stock price. The fair value by 2025 is now at $216.91 a share, giving a potential for 10.23% annualized growth. However, the valuation window is closing and if the stock continues higher, is soon will be trading at its valuation and you may miss an opportunity to buy.

 
Technical view weekly
 

Technical view weekly
 

The stock is now AGGRESSIVEE BUY
 

This post was published in our newsletter to our subscribers on Saturday, May 14th, 2023. If you want to learn more about our stock technical analysis subscribe to our weekly newsletter.
 





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