Apple Inc. (AAPL) designs a wide variety of consumer electronic devices, including smartphones, tablets, PCs, smartwatches, and TV boxes, among others, with the majority of revenue coming from the iPhone.

The company’s Services and Wearables businesses are expected to drive sales growth this year. In fact, the Services segment has emerged as the company’s new cash cow. AAPL’s entrance into autonomous vehicles and augmented reality could serve as a long-term growth opportunity.

The company had a whopping $70 billion in cash on hand as of the most reported quarter. This certainly compares favorably to its short-term debt of $13 billion. AAPL also has very high return on equity (110.3%) and ROIC (41.4%) ratios.

Over the past year, sales are up 21.4%, while earnings rose 39.8%. Revenue is expected to rise 21.9% year over year this quarter, while earnings are forecasted to soar 54.7%. From a valuation standpoint, the stock appears a tad overvalued, with a forward P/E of 23.92.

While AAPL’s stock is up over 50% in the past year, its recent performance has been mixed as shown in the chart below.

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Take a look at the 1-year chart of AAPL below with added notations:

  Chart of AAPL provided by TradingView

AAPL has fallen into a small trading range over the past several weeks. While in the range, the stock has formed a resistance level at $128 (red), and a level of support at $123 (green).  AAPL is approaching the top of the range, but at some point the stock will have to either break the resistance or the support.

AAPL is trading within a range. The possible long positions on the stock would be either on a pullback to $123 or on a breakout above $128. The ideal short opportunity would be on a break below $123.

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Christian Tharp, CMT

@cmtstockcoach

AAPL shares rose $0.16 (+0.13%) in premarket trading Monday. Year-to-date, AAPL has declined -3.48%, versus a 13.83% rise in the benchmark S&P 500 index during the same period.

About the Author: Christian Tharp

I am an expert stock market coach having helped over 4000 beginner and advanced traders & investors from around the world take control of their financial futures. I also write stock market related articles for the Adam Mesh Trading Group and Yolo Publishing. More...

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