Apple stock is heading towards $170 and it is good for investors
Apple stock is getting little respite from Wall Street. There have been numerous downgrades by analysts which has put a bearish sentiment around the stock. An article in mid-March 2017 mentioned some of the challenges facing the company with an under-perform rating at $170. Since then, the stock has had a good bullish run till the latest earnings call. I believe a major part of the bullish momentum was supported by external factors like tax reform, weaker dollar from 2017 to mid-2018 and heavy buybacks.
- Apple stock has seen a major reversal in sentiment in the past few weeks.
- Besides lower unit sales in iPhone segment, there are challenges in several verticals of Services segment.
- Apple trading at modest valuation would help in boosting the company’s ability to reduce share count at a faster pace.
- A lower valuation multiple also gives the management sufficient time to launch initiatives in streaming, wearable, and ad business.
- Value investors can consider entering the stock at a valuation of 10-12 times EV/FCF ratio.
We should see a lower valuation for the Apple stock as YoY comparisons become difficult. The management also needs sufficient time to build future growth verticals like streaming which is a very tough business with a number of strong challengers. The benefit of a lower apple stock price is that the company would be able to reduce the share count at a much faster pace. Investors looking for a good entry point should wait for the current correction to play out. An ideal entry point would be at EV/FCF ratio of 10-12 or $130 to $150 range.
Apple Stock Could Double Over 3 Years?
Despite a strong start to the year, Apple stock (NASDAQ:AAPL) is ending 2018 on something of a sour note. The company hit a $1 trillion market cap in August, becoming the first U.S. company in history to achieve that benchmark. However, since hitting an all-time high in early October, shares of the iPhone maker have lost more than 25% of their value, due to fears of slowing iPhone sales and a possible trade war with China.
While these issues may be worth watching, one longtime bull thinks shareholders are missing the big picture. He believes that Apple is taking a breather before a massive run that could see the stock more than double from its current price over the next three years.
Apple Stock Below $170: Time to Buy?
Apple stock continued its downward slide last week, declining about 2%. This brings the apple stock’s total pullback since Oct. 1 to 27%. The tumbling stock price may have opportunistic investors wondering: Is it time to pounce and buy some shares?
While there are some good reasons for the recent pressure on Apple stock, a 27% decline may have gone too far.
What’s weighing on Apple stock
Apple stock’s beating started with a broader market sell-off of tech stocks in October. But company-specific news has contributed to its decline, as well.
Apple could see revenue declines in the near term. But Apple’s strong pricing power, evidenced by the iPhone’s recent big jump in average selling prices, shows how important Apple products remain to customers.
December 16, 2018
December 16, 2018