Source: StockCharts Apple Incorporated
As traders take aim at 2020, and the prospects for the New Year, due consideration needs to be given to the possibility of an economic downturn. While the Dow Jones Industrial Average (DJIA), the NASDAQ, S&P 500 index, and the Russell 2000 have performed astonishingly well, the bull run cannot continue unabated. One of the most unabashedly successful stocks, and the world's most valuable company, is Apple Inc (AAPL: NASDAQ). The world's premier high-end manufacturer of hardware and software (MacBooks, iPhones, iWatches, iPads, and iOS technology) has enjoyed uninterrupted success, seemingly ad infinitum. At the time of writing, Apple had broken through its previous 52-week high, and all-time high, to trade over $311 per share.
The 50-day moving average of AAPL is $273.30, and the 200-day moving average (the long-term average) is $222.20 per share. Yet, neither of these metrics comes close to the prevailing price of the stock. The Manhattan for Apple stock looks more like a continuum from the foothills to the summit of Mount Everest, than it does an urban jungle with whipsaw pricing between the skyscrapers. When Bollinger Bands are introduced into the equation we get to see some important metrics. For starters, the middle band is $289.95, the lower band is $267.65, and the upper band is $312.24. This paints a clear picture of the trajectory of Apple stock. If the prevailing price exceeds the upper Bollinger Band, the stock is overbought and is subject to a downward correction. Indeed, this thinking is supported by analyst opinions who have given an overvalued rating of Apple stock.
What are the Recommendation Trends for Apple Stock?
Apple Inc is currently valued at a market capitalization of $1.36 trillion. It has a 26.21 price-earnings ratio, and an $11.89 earnings per share. The sharp price appreciation in recent weeks is at odds with the 1-year price estimate of $276.38. Yet, despite this discrepancy Argus Research recommends a buy rating for Apple. As an overvalued stock, Apple has more buyers than sellers, as evidenced by the sharply increasing price over time. Traders appear to be justified in their decisions with bullish sentiment about Apple, given its earnings figures over the past 4 quarters. Yahoo analysis confirms that Apple has posted earnings beats in all four quarters since Q4 2018. In Q3 2019, Apple’s estimated EPS was $2.84 and Apple’s reported EPS was $3.03. For Q4, 2019, Apple's estimated earnings per share is $4.53. The reported earnings have yet to be released.
Consensus Ratings for Apple Stock
Trading trends indicate strong support for a sustained bull run on Apple. After breaking through the psychological $300 barrier, Apple continues to breach new ground in 2020. Traders are overwhelmingly bullish, with 85% buyers and 15% sellers at leading CFD platform for online stock trading, Plus500. Much the same is true across the board where Apple remains the darling of traders and investors the world over. Consider that over the past 1 year, Apple's stock prices increased by an incredible 103.29%, with a 3-month performance of 31.06%. The stock appears to be unstoppable, but a caveat is in order – everything that goes up is ultimately subject to a correction at some point.
The dividend history is equally impressive, with the last reported AAPL ex-dividend date on November 7, 2019, with a cash amount of $0.77, a declaration date of October 30, 2019, and a payment date of November 14, 2019. Apple's quarterly earnings surprises have been particularly impressive since December 2018. The earnings surprise represents the difference between the consensus earnings per share forecast (EPS), and the actual earnings per share (EPS) for that quarter. The earnings surprises according to NASDAQ.com over time were reported as follows:
- December 2018 – 0.24% earnings surprise
- March 2019 – 3.8% earnings surprise
- June 2019 – 3.81% earnings surprise
- September 2019 – 6.69% owning surprise
With each quarter yielding an outsized return for investors and traders, Apple has retained its status as a bullish stock. While the company's revenues have dropped between 2018 and 2019 (from $265.6 billion to $260.17 billion), the stock price has continued to rise. In terms of recommendation ratings, the consensus is a buy at 2.2, on a rating scale of 1 – 5, where 1 is a strong buy and 5 is a sell. Various companies have assessed the value of Apple as a buy stock in 2020, including Bank of America, Cascend, and Needham. However, RBC Capital maintains an outperform rating for Apple. For now, traders are cashing in on Apple’s solid performance, but things may change.
Tarik Pierce is the founder of InvestorTrip.com and regularly contributes articles to this website.
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