Apple Inc. (NASDAQ:AAPL) stock will be a long-term winner even if iPhone sales don’t increase
Late 2018 was a rough time for Apple (NASDAQ:AAPL) and for Apple stock. AAPL struggled to sell iPhones, and, as a result, failed to live up to the expectations of investors and analysts.
Many downgrades of Apple stock followed, as analysts’ estimates for AAPL came crashing down. It became the consensus thesis on Wall Street that smartphones had already peaked, and that going forward, the growth of the iPhone business would only be derived from price hikes and a small chunk of switch buyers.
But Apple stock has staged an impressive comeback in early 2019 as investors have rallied around Apple’s potential to grow at healthy rates even with a flat iPhone business. Year-to-date, Apple stock is already up over 10%.
This rally is far from over. The truth is that Apple stock has huge upside over the long-term, thanks to the loyalty of its customers and Apple’s ability to further monetize them, using multiple, software-focused services. Thus, even if the iPhone business is flat, huge growth from a continuously expanding portfolio of software services will keep Apple’s revenues, margins, and profits on an uptrend.
Today, Apple stock trades at just 15 times analysts’ average estimate of the company’s forward earnings. That’s a pretty cheap multiple. Thus, as long as Apple’s revenues, margins, and profits remain on an uptrend, Apple stock will remain on an uptrend, too.
The bottom line is that AAPL can rise without robust iPhone growth. The company’s software business has enough potential – and Apple stock is cheap enough – to keep AAPL stock on an uptrend for the foreseeable future.
The Bottom Line on AAPL Stock
iPhone sales have already peaked. That was a tough pill to swallow for investors in late 2018, so Apple stock dropped.
Now, though, Apple stock is rebounding because the market is starting to realize that the future of Apple is bright, even if its iPhone sales don’t increase. This thesis will gradually gain traction over the next several years as its new software initiatives generate a great deal of revenue. As that thesis gains traction, investors will flock back into Apple stock, and AAPL stock will head materially higher.
Overall, the bias in prices is: Sideways.
Note: this chart shows extraordinary price action to the upside.
The projected upper bound is: 186.18.
The projected lower bound is: 162.50.
The projected closing price is: 174.34.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 25 white candles and 25 black candles.
A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).
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.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
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 69.9645. This is not an overbought or oversold reading. The last signal was a sell 10 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 64.16. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 34 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 155.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 11 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 4 period(s) ago.
Rex Takasugi – TD Profile
APPLE INC closed up 1.260 at 174.230. Volume was 44% below average (neutral) and Bollinger Bands were 32% narrower than normal.
Open High Low Close Volume___
174.160 175.870 173.950 174.230 21,873,358
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 171.29 161.12 191.41
Volatility: 11 49 38
Volume: 21,535,310 36,992,120 32,590,044
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 9.0% below its 200-period moving average and is in an upward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume into AAPL.O (mildly bullish). Our trend forecasting oscillators are currently bullish on AAPL.O and have had this outlook for the last 20 periods.