Even after its earnings set new records last month, is Apple Inc. (NASDAQ:AAPL) fully valued?

Even after its earnings set new records last month, is Apple Inc. (NASDAQ:AAPL)  fully valued?

Even after its earnings set new records last month, is Apple Inc. (NASDAQ:AAPL) fully valued?

Apple (NASDAQ:AAPL) recently reported strong quarterly results in January. However, Apple stock did not respond with a robust rally. At least, not in the way that investors were hoping for.

I am a long-time bull, and Apple is one of the few positions that’s earned a “set it and forget it” label; More commonly known as buy and hold. Every once in awhile, though, I will trade around the name — as either the selloffs become too extreme or the rallies are too much.

Overall, I like to take advantage by buying or selling in each respective case.

The current rally, stemming all the way back from the lows in January 2019, feels like too much to me. From the January 2019 lows to the recent high, Apple stock has rallied about 125%.

If that feels too cherry-picked, then how about the 83% rally from the May low? Or the 66% rally from the August low? These are some seriously big numbers, particularly for a company that boasts a $1.4 trillion market cap.

Valuing Apple Stock

Keep in mind, I really like Apple as a business. And I’ve believed for a long time that it deserved a higher valuation thanks to the growth in its wearables business — like the Apple Watch and AirPods — as well as its robust Services unit.

The company has built itself into an impressive unit, but at what point is all of that baked into the share price? It’s not as if the iPhone is a recent invention, and the AirPods business isn’t suddenly worth $500 million in market cap.

Overall, it begs the question of: If this rally has gone on for too long, then when is Apple a buy? Or, if you’re not looking to get back in after a recent sale and instead looking to initiate a new position, where should that be done?

The big hype for Apple stock is the coming 5G iPhone later this year. But while we wait for that, the latest iPhone unit is doing considerably well with its sales. So well, in fact, that Apple just smashed its fiscal first-quarter earnings and revenue expectations and provided significantly better-than-expected Q2 guidance.

For the year, analysts expect Apple to earn $13.89 per share on revenue of $285.43 billion. If the company generates in line results, this will represent growth of 16.8% and 9.7%, respectively. Those are pretty solid numbers for a $1.4 trillion company. However, is it worth Apple stock’s 25 times earnings?

Technical Indicators

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

The projected upper bound is: 341.70.

The projected lower bound is: 315.10.

The projected closing price is: 328.40.

Candlesticks

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 30 white candles and 20 black candles for a net of 10 white candles.

Momentum Indicators

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.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 74.3981. This is not an overbought or oversold reading. The last signal was a sell 1 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 63.00. 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 sell 9 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 105.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 3 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 14 period(s) ago.

Rex Takasugi – TD Profile

APPLE INC closed up 7.590 at 327.200. Volume was 1% above average (neutral) and Bollinger Bands were 28% narrower than normal.

Open     High      Low     Close     Volume___
321.470 327.220 321.470 327.200 28,432,572
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 319.59 298.40 236.17
Volatility: 39 28 30
Volume: 32,406,812 31,527,390 28,270,176

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.

Summary

APPLE INC is currently 38.5% above its 200-period moving average and is in an upward 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 bullish on AAPL.O and have had this outlook for the last 121 periods. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.

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