Last week the market endured a sharp correction, and it seems like the dust has now settled and investors are moving forward. Many tech stocks have shown higher volatility than usual, which is expected after a correction. After the correction, there is now many stocks trading at undervalued levels, providing a great buying opportunity for investors. We are seeing enticing price points of some of the largest companies on the index.
The company we are looking at, NASDAQ: AAPL, is a prime example of an undervalued share after a correction. The correction hit Apple investors with less brunt than investors in other S&P 500 companies. Apple stock has been a steady gainer for 2018, with gains of nearly 32% on a total returns basis since January. This means that Apple has outperformed the S&P 500, which made gains of 5.96% in the same time frame. Currently, we’re looking at a massive buying opportunity in Apple thanks to last week’s correction.
Apple doing better than ever
Apple’s share price has been on a steady upward trajectory, with a price range that Apple has a high-probability of trading within. The upward channel shows what Apple shares are likely to do in the next few weeks. If the share price deviates outside of the current channel then it is likely there is a major sell-off.
In the long-term, Apple’s price has remained strong with higher highs and lows that show it’s a strong investment compared to other big players in the market. To summarize, Apple has been capitalizing on its gains, despite some declines in share price. The fact that Apple can remain strong in a correction is precisely why you should think seriously about adding AAPL to your portfolio.
For Apple bulls, risk analysis is essential. For investors, a protective stop would be wise, placing at the lower side of support levels – around the $205 mark. If Apple does decline to $205, then the bull trend is finished. But with today’s signals, the market is not signaling the end of Apple’s bull run anytime soon.+
The next earnings report from Apple will include the next 10 days sales of the iPhone XS and XS Max, although the iPhone XR will be included. The next quarter is pivotal for Apple due to its new trio of iPhones. There are a multitude of challenges that Apple is facing, all of which may impact the Apple stock price. The main issue that Apple has to contend with is the trade-war with the U.S and China. The trade-war may cause the volume of iPhone sales in China to drop. Despite trade-war challenges, Apple investors are still hopeful that the excitement for the new iPhones, along with reasonable pricing, will outweigh any other issues. As long as the Apple market cap stays above $1 trillion, then investors will remain hopeful.
Toni Sacconaghi, a Bernstein analyst, said that he predicts Apple will continue to make gains due to their smart pricing (in Q4). Apple has still managed to outperform analyst forecasts despite selling less iPhones than expected. By increasing the prices of iPhones, Apple has offset the decline in sales. “Given that Apple has changed its SKU [stock-keeping unit] strategy and pricing yet again (with an initial launch of the iPhone XS Max and XS), we estimate that ASPs could be significantly higher than consensus,” said Sacconaghi.
Wall Street will be using the September-quarter sales of the iPhone XS and XS Max as an indication for initial demand. Q4 results will come this Thursday, giving executives a chance to speak about the Holiday period predictions for Apple.
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