Apple Inc. (AAPL) designs a wide variety of consumer electronic devices, including smartphones, tablets, PCs, smartwatches, AirPods, and TV boxes, among others, with the iPhone making up the majority of total revenue. In addition, the company also offers a variety of services such as Apple Music, Apple TV+, and Apple Pay, among others.
The company saw continued momentum in its Services and segment and strong performance from iPhone, iPad, Mac and Wearables in the most recent quarter. However, manufacturing disruptions and silicon shortages are expected to have a negative effect in the next quarter. Growth in its Services segment is also expected to decline.
AAPL has a strong balance reflected by its $62.6 billion cash balance at the end of the most recent quarter. This compares favorably to its short-term debt of $15.6 billion and has led to a Quality Grade of B in our POWR Ratings system. Analysts expect earnings to rise 11.9% year-over-year in the current quarter and fall -5.7% in the following quarter.
The stock looks a tad overvalued with a forward P/E of 26.81. AAPL was showing bullish momentum from early June through early September, before performance dipped in September. The stock rebounded in October, but performance has been mixed since as shown in the chart below.
Take a look at the 1-year chart of AAPL below with my added notations:
AAPL is consolidating within a common chart pattern known as a symmetrical triangle. A down trending resistance combined with an up-trending support forms the triangle pattern (blue). Since there is no true way to know which way the stock will break, traders often wait for the breakout or breakdown before entering a trade.
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A trader could enter a long position on a break above the down trending resistance with a protective stop set under the entry level. However, if the stock were to break below the trend line support, a short trade could be entered with a protective stop above the trend line.
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AAPL shares fell $0.16 (-0.11%) in premarket trading Wednesday. Year-to-date, AAPL has gained 14.60%, versus a 26.59% 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.
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