I look at Apple, and I’m not excited. I don’t see anything remotely innovative with any of their latest announcements. To me, Apple’s CEO is doing a great job at what he was he was hired to, optimize.
According to Business insider, Apple is sitting on $200 billion in cash. Further, the company capitalized on low interest rates and raised 7 billion in debt.
The company doesn’t have to worry about cash for a while but it does have to worry about earnings and innovation. Investors aren’t too worried at the moment about these two aspects of the company, the stock is at all time highs, trading at around $300 at the time of this writing.
Let’s look at Apple stock and see if Apple shares are worth buying at the current moment.
Join our Pro-Community.
✅Access to ALL content.
✅Access to the CTN editorial staff.
✅Access to our CTN trading dashboard.
✅Access to our exclusive telegram channel where all our pro-members and editorial staff are in.
✅Ability to request content/research material!
What You Need to Know about Apple Shares
Apple provided investors with amazing returns in 2019. But the central question investors need to ask is, will Apple continue to provide amazing returns into 2020? Meeks, an investor thinks not, and notes that Apple shares are headed down.
He was quoted byCNBCsaying “I value the company at about $170 a share, believe it or not,” and he went on to state “we’re talking about a company that based on my model is about $100 per share overvalued.”
I would agree with Meeks, he’s got a point.
Earnings are largely stagnant over several years and I, like others don’t see innovation on the horizon.
What are you excited about for Apple? The switch from hardware (iPhones) to software services? Airpods? The Apple Card?
None of these take you to the next level, they’re improvements that add value to the consumer but its nothing like the iPhone era.
Many may be over-hyping the transition, expecting further earnings growth when earnings are in a recession.
The New York Times notes “Apple built its enormous business on the iPhone, but sales of the device have slipped for three straight quarters in a saturated market for smartphones.” That’s disconcerting but investors and analysts are screaming that Apple is a buy. Those on the sell side of Apple think that the company will continue to have a decline in growth and earnings. Smartphones aren’t selling like they used to and analysts don’t expect iPhone sales to make a comeback.
Will Apple Come Back?
I’m not counting Apple out in the long-term. Further, I would only snap up Apple stock in the short-term if I’m watching the stock regularly. The company has had ups and downs in the past but recovered with innovation and leadership. Apple is happy with its current position in the markets and sitting on significant cash reserves. The Cupertino giant has strong talent, a robust cash position, and iterative progress.
Increasing iPhone prices and branching into content creation is not going to cut it. The Apple store and the ecosystem it has is nice but resting on the past is a recipe for stagnation. I’m not counting it out because it has a compelling brand, a loyal following, and the ability to figure out further ways to monetize. The team at Apple have pushed an advanced biometric system, they’ve released amazing smartwatches (that’s still numero uno) and continue to improve their products.
But you love Apple because it can take your experience to the next level and without that ability, Apple recedes into the past. The corporation becomes a relic that people will reminisce about while fawning over the next hard charging innovative company.
Finally, without that spark, where will the earnings come from to meet investor expectations? Apple shares are a buy when the company corrects to reasonable levels that align with reality. The price of Apple stock is far from where it needs to be right now, at least in my view.