Apple stock is one of the tried-and-true plays for traders looking to capitalize on strength in the tech sector, but it’s been down about 24% for the year. However, some analysts aren’t ready to give up on the iPhone maker, which is still fundamentally sound.
Inflation fears have been racking tech’s biggest and brightest players, as reflected in the Nasdaq 100’s decline of about 35% year-to-date. Still, Apple offers investors a value play, especially if the stock was too expensive to get into prior to 2022.
With Halloween just around the corner, recession fears might be spooking the capital markets, preventing investors from getting in on value-oriented prices in stock like Apple. However, some analysts are undeterred by tech’s recent weakness.
“We are not scared of Apple’s stock despite Halloween and investor fears,” said Citi analyst Jim Suva in a Yahoo! Finance article.
“1) Checks suggest iPhone 14 build is still on track for 2H expectations of ~90 million units, and we expect a foldable phone in 2023; 2) Mix shift continues to skew away from lower-priced Android phones towards more mid-end and premium pricing products; 3) A ~$90 billion (~4% of current market cap) stock buyback, which lends support to shares; 4) Sticky services revenues and potential for more devices-as-a-service offering driving margins higher; and 5) New product category launches such as AR/VR headsets and Apple Car in 2025+, not currently reflected in current estimates/market cap,” Suva added further.
Traders who want to play on bullishness in Apple can use the Direxion Daily AAPL Bull 1.5X (AAPU). AAPU seek daily investment results equal to 150% of the performance of the common shares of Apple, Inc.
The Bearish Side of Apple
Of course, there are two sides to every trade. Recession fears are mounting, which could signal further weakness in tech through the rest of 2022.
As the Yahoo! report noted, there’s still pressure on the stock to perform “despite an impressive cash position and sturdy recurring revenue stream via various services.” This, in turn, “reflects investor concern about the global economic slowdown that reportedly led Apple to cut production on some models from its new iPhone suite.”
“Clearly this negative news in light of an already shaky macro and jittery market will send shockwaves across the Street with investors concerned this is another shoe to drop in this dark market with golden child Apple front and center,” Wedbush analyst Dan Ives said.
That said, traders can also look at the Direxion Daily AAPL Bear 1X Shares (AAPD). The fund essentially takes the inverse side of AAPU, allowing traders to hedge their bets if necessary.
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