Monday, September 27, 2010

Cult Stocks #2-AAPL

The Second installment of my "cult stock" series, where I analyze whether the most popular stocks are worth the hype and I give a recommending trade at the end.  Today we will be analyzing the most loved stock, Apple (AAPL).

Fundamentals:  Apple has some of the best fundamentals I have ever seen.  Apple is very innovative, they know what the consumer wants and they provide it very well.  Apple has a very, very loyal customer system.  Apple has shown consistent success with their flagship products Mac and iPod.  They have added two excellent products: iPad and iPhone.  There is some buzz that the iPhone will be hitting Verizon next year and it should be interesting to see whether people will drop their android phones for an iPhone. 

They have zero debt, a P/E ratio of only 22 and a PEG (future growth) of .99.  From a fundamentals stand point, AAPL is undervalued, imagine that!  Steve Jobs is an excellent CEO that continues to wow consumers, analysts and competitors.  Apple is in a great stop as far as fundamentals go...

Technicals:  The technicals are rough as you can imagine.  The overbought status is evident.  Look at the indicators/oscillators:

  • RSI: 80
  • MACD: 9.9!
  • Williams%R -10
  • Stochastics 92.24
On a more positive note for technicals, the Bollinger Bands are showing that Apple is finally moving out of its sideways trading range from the last few months.  This means that the stock could be on a move again.  Many analysts are predicting around $340-360 by the end of next year.  That is a pretty big upside!

Final Trade:  Apple continues to outperform everyone, including markets.  Apple is a great company that innovates well and listens to the consumer.  Management gets the job done above the call of duty.  Apple blows away earnings every quarter and they haven't looked back.  The technicals are a little sour but momentum is on the upside.  Fundamentals are great, no debt, low P/E and PEG.  I am recommending a buy for AAPL or some longer term call options.

Disclaimer: Invest Chief is not held accountable to any loses sustained by stocks recommended. It is always important to do your own research of the stock before you invest. These trades and ideas are the opinions of the crew of Invest Chief. Invest Chief receives absolutely no compensation from companies that are recommended. We are a private organization, dedicated to promoting financial well being and prosperity.

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