What do Apple and Exxon Mobil have in common?
At first glance, absolutely nothing. After all, one is a technology company while the other is an energy company.
But, they are the two largest publicly traded companies and thus are also the two largest stocks in the S&P 500. Their combined market cap is $949 billion.
And, they're up this year; Apple has gained 5.7 percent in 2014 while Exxon Mobil is up nearly 1 percent year-to-date.
Of these two companies, David Seaburg, head of sales trading at Cowen and Company, thinks Apple is the better buy.
"We saw Apple benefit this year greatly from the rotation out of the growth names into the value, legacy tech names," Seaburg said. "But, it's really the capital allocation policy that they have in place that's going to get the stock going and is going to lift it off."
In April, Apple announced it was increasing its share buyback program by $30 billion to $90 billion, to be completed by the end of next year. It also raised its quarterly dividend to $3.29 from $3.05 per share.
Seaburg notes the expected launch of an iPhone 6 by summer's end, potential wearable technology, and even the company's reported $3.2 billion for Beats Electronics as potential near-term triggers for Apple's stock.
"There is a lot of unknowns there, but there's also some concrete things that are going on," Seaburg said. "I cite this capital allocation process as being the most important thing."
Richard Ross, global technical strategist at Auerbach Grayson, said the technicals are also bullish on Apple.
Ross noted Apple's stock is up 50 percent since it completed its bullish double bottom in July 2013. A month later, it also took out its 200-day moving average, also a bullish signal. By September, it entered a coil formation.
"That's a contraction of volatility," explained Ross. "We went back and forth on Apple for a matter of months but ultimately we [got] a breakout – or an expansion – of volatility from that coil. The energy that was stored as the pattern was created is now being released."
The stock's breakout near current levels in March led to a consolidation that could set the stage for a move up, according to Ross.
"Apple is a name that could trade $650," Ross said. "It has a lot going for it both technically and fundamentally, and I think you can still buy the stock here."
To see the full discussion on Apple, with Seaburg on the fundamentals and Ross on the technicals, watch the above video.
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