As a long-term investment, I believe Apple Inc. (NASDAQ:AAPL) is going to make owners of Apple stock very happy.
In mid-February, I suggested investors buy Apple stock, stick it in a drawer, and forget about it for the next five years, confident Tim Cook will continue to make all the right moves to keep the company growing while also protecting the goose that laid the golden egg.
“It might face some headwinds in 2018, but overall, I see a very healthy business that should hit $200 by December,” I wrote February 15. “It’s a buy-and-hold stock if there ever were one.”
As far as FAANG stocks go, only Amazon.com, Inc. (NASDAQ:AMZN) holds a candle to it, but for different reasons. Apple is steady as she goes while Jeff Bezos’ baby is go, go, go. Both will make you money in the long run.
Apple Stock’s One-Year Chart
I’m not a trader or even much of technical analyst, but when I look at the one-year chart of Apple stock, I see opportunities aplenty for those who are. I count at least four peaks and valleys over the past 52 weeks through April 12.
It got me thinking about an exercise I did a couple of years back where I would pick the stock falling by 20% or more in a week that I thought was best equipped to bounce back; I’d then track the performance in the days, weeks and months ahead.
Inevitably, many of the weekly picks recovered their losses, and then some. Of course, it helps to be in a rising market. I’m not sure the same would hold true in a prolonged downturn but that’s a subject for another day.
So, what if I were to apply this to Apple?
I went back over the stock’s weekly closing prices to see what kind of ups and downs Apple stock produced over the past year. I counted 15 weeks where its stock price increased by $3 or more over the previous week and 11 weeks where its stock price dropped by $3 or more over the previous week.
Apple moved one way or the other by more than $3 some 50% of the time. The trick is figuring out how to benefit from this Apple stock price movement.
So, I dug a little deeper.
Of the 11 weekly drops of $3 or more, seven were followed by an average uptick the next week of $5.35. Meanwhile, four of the weekly drops of $3 or more were followed by a second weekly drop averaging $5.84.
What’s the Skinny on Apple Stock
In the end, if you bought 100 shares of Apple stock each time it dropped $3 or more in a week and then sold it at the end of the next week, I estimate you’d have made $15,521 — 1,100 shares multiplied by $14.11, the difference between the up weeks and the down weeks — for a return of 8.8%.
That might not seem like much given Apple’s stock generated an annualized total return of 24% over the past year, but if you’re a trader using leveraged funds to make all 11 buy-and-sell moves, it’s actually pretty good.
That said, don’t try this with your retirement portfolio.
As of this writing Will Ashworth did not hold a position in any of the aforementioned securities.