How can you not invest in Apple?

Fall. You’ll see traffic backed up in rural eastern Long Island this time of year. Out on the farm and the orchard. You could spend all day traveling less than five miles per hour on a country road because it’s October. Everyone decided to pick their own apples.

Well, it’s also just days before the third quarter earnings season kicks off in earnest this week. Analysts are always trying to determine their position before the season, and this season’s results have been more volatile than usual. More importantly, analysts are trying to put Apple (AAPL) is only about two weeks away, because Apple is the American stock exchange, and that sort of thing. As Apple stock rises, so does the S&P 500. It’s time for Apple to choose.

Only this week

Last night, readers may have noticed that four-star KeyBanc-rated analyst Brandon Nispel (by TipRanks) maintained his “overweight” rating and $185 price target for AAPL, while increasing his estimate for AAPL. revenue and adjusted EBITDA based on data showing increased spending on demand for iPhone 14 Pro Max and iPhone 14 Pro.

This comes after research firm IDC earlier Monday noted that Apple was likely to ship 10.6 million Mac computers in the third quarter, up 40.2% year-over-year. Readers will recall from this morning Market research that globally, the number of PCs shipped in Q3 was almost 20% less than in Q3 2021, so this will be a big deal.

However, earlier on Monday morning, five-star Bank of America analyst Wamsi Mohan (at TipRanks), who has an AAPL “hold firm” rating with a target price of $160, slashed his estimate. His report on iPad sales for 2022, 2023, and 2024 under consensus, suggests that more than a quarter of iPads sold between 2020 and early 2022 could be “surplus” as people replace models. older to work remotely and go to school. Wamsi cut its iPhone estimates for the next few quarters at the end of September.

Back to last night… five stars (TipRanks) Wells Fargo analyst Gary Mobley downgraded chip maker Qorvo (QRVO) to “balanced” from “overweight”, while reducing his target price from $130 to $85. Why? Yes, team multiples, but also because the company depends on Apple. Needless to say, this news pressured APPLY early Tuesday morning.

Income

Apple is expected to report after the closing bell on Thursday, October 27. Wall Street is looking for GAAP EPS of $1.27, in the range of $1.13 to $1.35, on revenue of $88.8 billion. Expectations range in terms of revenue from $85.1 billion to $92.8 billion. As expected, these numbers should be good for 2.4% profit growth on top of 6.5% revenue growth.

Last quarter, Apple ran at the current rate of 0.87. This is the second quarter in a row, Apple’s current ratio is below 1.0. That might come as a surprise to some who don’t look at the balance sheet. That said, Apple doesn’t set the asset side of its balance sheet with entries for “goodwill” or other intangibles. Surely the brand name alone is worth a fortune.

The company has a huge amount of debt, which I don’t love, built in a very low interest rate environment. That makes them look smart. Free cash flow held steady at $1.29 per share in Q2. This is down from Q1 and Q4, but up year over year. Tangible book value printed at $3.61 at the end of the second quarter. This is down from the $4.07 average over the previous four quarters.

I don’t like the balance sheet the way it is. I see how the company is managing it and I “get” the strategy. I think. But, I don’t love it. That said, the company buys back shares, pays a small dividend, and pretty much everyone and every fund you know is invested in name, whether they know it or not. So what should I do?

My Take

I follow some analysts quite closely. Ivan Feinseth, rated five stars (by TipRanks), of Tigress Financial is one of them. Ivan isn’t just a “five-star,” he’s actually at the top of 2% to 3% in my book, and possibly just the alpha dog when it comes to Apple. Yes, I know other analysts are more visible. So what.

Feinseth has a “buy” rating on AAPL with a $210 target price. That target price is second only to Dan Ives at Wedbush ($220), one of my most closely watched analysts. Last Monday, Feinseth wrote that the recent weakness in equities is an opportunity. “AAPL’s industry leadership and strong brand value, driven by innovation and strong cash flows, will continue to generate a growing Return on Capital, fueling our continued growth,” he said. Economic profits and shareholder value creation.”

Feinseth also sees the CarPlay Interface underscoring the company’s efforts to expand its presence in the automotive market and ultimately the upcoming launch of a virtual reality headset as a driver. In short, Feinseth sees “new product introductions, ever-expanding ecosystem, and growing service revenue” continue to drive the trend toward accelerated performance and cash flow.

My question is, after understanding how invested the public is in AAPL, and how good analysts are, how do people who are good at their jobs feel… If I were to invest in stocks votes, can I afford not to be invested in AAPL?

The stock has been consolidating all year, and has been technically weak at the end of the year. All three of our focus points on the moving averages (21-day EMA, 50-day SMSA, 200-day SMA) are trending lower. My thinking is that AAPL can be bought down to $129. Losing that level will create a new 16-month low and will force a rethink of the stock.

Do not misunderstand me. I don’t bet the farm. My biggest area of ​​exposure right now is cash. Then, as it happened, for defense contractors. Then some energy and medicine. I’m not all in, not even close to it. Apple, I think is a special case. It has its own place on my book.

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