Apple stock technical and value analysis

On the last day of last summer, Apple shares reached another record high. One of the prerequisites was the news that the famous investor Warren Buffett increased its stake in the AAPL.

At the end of August, Apple’s paper grew by 18%, which was a consequence of the income statement published on July 31. They were more mediocre than good. But most experts agree, what AAPL growth momentum does not weaken. Nevertheless, there are reasons to relate to the “burning” brand.

1. Valuation

apple stock analysis

Many, and Mr. Buffett himself, cite the relatively low cost of their decision to purchase AAPL shares as the key reason. It is important to note that since September 1, the company’s securities are traded with the highest price-earnings ratio (P / E = 20.3). In 2009, it reached 20. This is also much higher than the average for the last five years (14.1), and slightly less than the general market indicator of 20.7. This multiplier shows how quickly the company’s business will pay off..

Similar indicators, such as the ratio of price to sales volume and price to book value, are also in extreme positions. At the same time, dividend yield fell by only 1.2.

Valuation analysis of Apple shares allows us to say that as a result of recent events, Apple paper can no longer be called cheap, although they are worth their money.

2. Apple stock technical analysis

apple stock analysis

At the beginning of the month, the relative strength index (which determines the strength of the trend) exceeded the maximum thresholds set in the previous year, and jumped over 80. By the middle of the month the situation began to stabilize, and now the RSI is in the range 72-74, but this is close to the critical point. It is worth recalling that in previous times, when Apple shares fell into overbought conditions, the chart showed significant short-term jumps.

In addition, Apple is trading with a large margin of current data from the 100-day moving average at $ 190.94. There were several similar moments in the history of the company, and they led to a rollback in prices.

There is another important point. The general nature of the AAPL price change creates the prerequisites for an excessively growing trend. Stocks are trading well above the intraday high, reach that level by the end of the day, and then close below the exchange rate. Cost reversals of this nature are indicative of excessively growing trends and “exhaust” buyers, because of which asset demand is falling.

3. Company size

apple stock analysis

Apple is the world’s largest company by market capitalization of approximately $ 1.08 trillion. Huge volumes complicate management and growth, because it requires work with large data arrays. Profit margin (the ratio of net income to total revenue) fell sharply. This means that Apple will generate even more revenue to achieve similar profitability indicators..

Given that the price-to-volume ratio is already in a critical zone, the additional sales growth needed to maintain stock growth seems simply mathematically impossible.

Apple’s internal options volatility is at the 49th percentile. This corresponds to approximately the average price of options, which makes their purchase strategy still viable. This means that to hold positions with a possible rollback AAPL it makes sense to just buy shares directly.

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