Apple Inc. (NASDAQ:AAPL) should rise modestly in coming years
f you’re a shorter-term trader, it’s not that important to think about long-term valuation and earnings growth. In that case, quarterly earnings and technical analysis tend to be more relevant.
But Apple stock is, at least among tech companies, viewed as a long-term sleep well at night buy and hold play. And as such, it’s pivotal to think about where the company will be in five years to decide if it is a good buy at today’s price.
Let’s start with arguably the most important metric: how fast earnings will grow. Analysts see earnings growing at about 11%/year compounded over the next five years. Assuming that the analysts are in the right ball park, that puts AAPL’s earnings around $21/share at the end of 2023.
Now we think about what a proper PE ratio for AAPL stock should be. Working backwards from the analysts’ estimates of 11% earnings growth, we can deduce that net income should grow around 6%/year.
That’s because the company has been buying back, on average, around 5% of its outstanding stock each year in recent times. Thus share buybacks will account for just under half of earnings growth, with organic increases in operating profits making up the rest.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 201.83.
The projected upper bound is: 194.73.
The projected lower bound is: 165.66.
The projected closing price is: 180.19.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white candles.
A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend. There have been 3 rising windows in the last 50 candles–this makes the current rising window even more bullish.
Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 44.5642. This is not an overbought or oversold reading. The last signal was a buy 0 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 37.23. This is not a topping or bottoming area. However, the RSI just crossed above 30 from a bottoming formation. This is a bullish sign. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 0 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -55. This is not a topping or bottoming area. The last signal was a buy 0 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 36 period(s) ago.
Rex Takasugi – TD Profile
APPLE INC closed up 6.700 at 180.940. Volume was 30% above average (neutral) and Bollinger Bands were 145% wider than normal.
Open High Low Close Volume___
176.730 181.290 174.930 180.940 46,062,540
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 181.35 210.15 194.37
Volatility: 52 45 32
Volume: 44,115,072 38,981,820 31,773,192
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
APPLE INC gapped up today (bullish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
APPLE INC is currently 6.9% below its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of AAPL.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on AAPL.O and have had this outlook for the last 34 periods.