My guess is that 95% of the people reading this article already own AAPL shares. Heck, I own them too and have done so none stop for several years as it is a cornerstone technology stock.
Unfortunately an honest reflection of the current state of Apple shows that it has lost a fair amount of its allure. Thus, we owe it to ourselves to explore AAPL with this POWR Ratings Breakdown where we review the outlook for shares on 5 different measures of its attractiveness.
Buy & Hold Grade = C
This is based on a myriad of factors including the price action the past year where we see a fairly flat +2.8% return over the past year with shares well off their highs. But really the thing driving that price was a severe decline in the earnings outlook that started in Q4. That has since turned a touch more positive with the recent earnings beat and raise.
Trade Grade = C
As noted above, shares did respond well to the recent earnings report with signs of growth coming from places other than the iPhone. But just as that story was taking root we have the recent market pullback coupled with news of iPhone on the wrong end of a large lawsuit. In time that negative will blow away with increased earnings prospects being the central thesis.
Industry Rank = C
The Technology Hardware group is in the middle of the pack (#76 out of 123 industries). However, AAPL plays in so many different industries, that it is hard to pin them to just one. I would say overall this is probably an unfair blemish on shares and you should consider it a notch better than the C rating.
Peer Grade = C
Within its group it is showing the 13th best ratings out of 26. But it is 1 place away from a B rating. So again, its Neutral, but leaning a notch more positive.
POWR Rating = C (Neutral)
This is the most vanilla set of ratings I have done for a stock where all 5 elements were a C rating (Neutral). Usually there is more nuance and variation.
Is Neutral the worst thing in the world? No…it is saying there is nothing special going on and shares will likely perform in line with the market average. I have heard much more disparaging things said at my daughters soccer games 😉
Here is why I think the outlook is a touch better than reported above. Apple turned the corner in the most recent earnings announcement. They are finding growth in areas outside of the iPhone. Mostly in the wearables. As that story gains traction, shares will likely outperform the market.
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Apple Inc. NASDAQ: AAPL shares were trading at $287.38 per share on Friday afternoon, down $0.32 (-0.11%). Year-to-date, has gained 15.50%, versus a % rise in the benchmark S&P 500 index during the same period.
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