Day-trading, or even investing for the next week or two, isn’t something I ever advocate. That said, if you buy Apple (AAPL) stock today, I have a feeling you’ll be up a few points come Monday, after the initial iPhone 6S sales figures are released.
The company’s newest iteration of its flagship product, and main source of revenue, was unveiled on Sept. 9, and reactions were mixed. Despite owning AAPL stock myself, I was awfully skeptical that the iPhone 6S would be a boon to the stock price.
I was wrong.
New Data Paints a Different Picture
Just last week, there were more ominous signs than encouraging ones, with Google (GOOG, GOOGL) search data and a worrisome silence from carriers such as Verizon (VZ), AT&T (T), Sprint (S), and T-Mobile (TMUS) stoking fears that the iPhone 6S would be a massive flop.
Pacific Crest analyst Andy Hargreaves actually helped spark a mini-selloff in AAPL stock last week when he cited those fears, stating that he believed demand for the 6S could be “meaningfully” below last year’s blowout iPhone 6 launch.
Today, with a richer mosaic of data on our hands, more analysts are weighing in, and the picture for AAPL stock doesn’t look nearly as weak. After reaching all-time highs above $134 per share in July, Apple shares fizzled and ultimately flirted with $100 in the wake of China’s stock market crash, as investors wondered about Apple’s China growth plans, a core piece of its growth strategy.
Wall Street research firm FBR thinks the fears are likely overblown, and reiterated its overweight rating on AAPL stock in a note this morning:
“Based on our survey data, coupled by strong pre-sales activity (especially in China), we believe the Street bogey for initial launch weekend sales is ~12 million units. When Apple releases initial launch data from this weekend on Monday am, we would view a 12 million+ number as overwhelming bullish for the name/December iPhone sales trajectory.”
A crucial takeaway from the internal survey data, FBR cites the popularity of the “Rose Gold” color as proof to be for the iPhone 6S, with about 35% of respondents saying the Rose Gold color was a “major selling point” for the smartphone.
Another reason AAPL stock seems primed for a Monday spike: The most recent data on Apple reveals that short interest on the stock rose 55% (as measured by the days-to-cover ratio) between Aug. 31 and Sept. 15. Translation: if the Apple iPhone 6S sales impress, some shorts will be forced to cover, buying back the stock and driving AAPL higher.
Another data point investors weren’t blessed with last week was solid iPhone 6S preorder data. T-Mobile CEO John Legere fixed that earlier this week when he penned this bullish tweet on Twitter (TWTR):
That was fast. Here we go… 1/ @TMobile customers are pumped to get the new #iPhone6s –preorders up >30% over last year! #WeWontStop
Considering, as FBR points out, that less than 30% of Apple customers have upgraded to the iPhone 6 to date, AAPL stock is well-positioned to benefit from a “super-cycle” in the next few quarters as customers upgrade old models.
Still, while I believe AAPL stock will be higher on Monday, buying AAPL with an eye to the long-term is the better way to think about it. After all, it trades at less than 12 times forward earnings, pays a 1.8% dividend, and boasts more than $200 billion in cash and investments. Where else can you find that?
As of this writing, John Divine was long AAPL stock. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.
