Apple Inc. (AAPL) — This major provider of consumer electronics appears to have an ever-evolving line of new products. In fact, this innovator has created new markets for its products many times. But Wall Street has become concerned about slowing growth, and AAPL stock has lost almost a third of its value in nine and a half months. The good news is that shares now look oversold as they approach an important support line.
Growth is indeed slowing for this more mature development company. S&P Capital IQ Equity Research estimates revenue will fall 3.1% in fiscal 2016 (ending in September), due in part to macroeconomic headwinds, lower smartphone demand and tough comparables.
But its analysts also note Apple has a strong customer base that is around $1 billion strong and high retention rates, in addition to robust free cash flow. They expect improving sentiment ahead of the iPhone 7 launch and estimate total revenue will expand 8.5% in fiscal 2017.
Capital IQ rates AAPL stock a “Strong Buy” with a 12-month target price of $130, saying shares offer a compelling value.
Following a triple-top (rounding) in AAPL stock and a decline of more than 30% from its all-time high of $134.54, made on April 28, the long-term (weekly) chart indicates that the major support line at $92 has a high chance of holding. MACD is oversold, which is a positive, and selling volume may have exhausted itself.
But from the look of things, institutional buying has yet to emerge, which could give us an opportunity to buy AAPL stock before the big boys jump in.
Shares are, at minimum, due for a trading bounce. Therefore, buy AAPL stock at $94 to $95 with an initial target of $110, which would result in a gain of more than 15%. My ultimate target is $117, the 200-day moving average, for a gain of more than 23%.
Apple also pays a quarterly dividend of 52 cents per share for a current forward annual yield of 2.2%, which is extraordinary for a quality high-tech stock.
