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Why Apple could see a strong holiday season

Talking Numbers

Are recent retailer revenue numbers anything to worry about for Apple?

US retail data as of late has been a mixed bag. But, could that affect one of the world's most beloved consumer product companies, Apple?

Sure, US retail sales were up 0.4% in October compared to September. And, October 2013 sales excluding autos were 4.2% higher than last year.

However, some major US retailers recently reported disappointing revenue numbers.

Company 2013 Q3 revenues
($ billion)
2013 Q3- expected revenues

($ billion)

2012 Q3 revenues

($ billion)

2013 Q3 revenue growth vs. 2012 Q3
Wal-Mart $115.69 $116.81 $113.93 2%
Target $17.26 $17.363 $16.78 3%
Dollar Tree $1.88 $1.9 $1.7 11%
Sears $8.27 $8.39 $8.86 -7%

While the largest retailer in the US, Wal-Mart, had higher revenues compared to last year, it couldn't keep pace with the nation's retail growth of 3.9%. Neither could Target. To be sure, though, this most recent quarter included a government shutdown.

Yet these are some of the lower-end retailers, with more exposure to the effects of a government shutdown. Apple's offerings are marketed as premium products. And, the Apple brand was built on its past innovative products.

"I wouldn't take the head-fake and extrapolate that just because Wal-Mart has disappointing same-store sales," says Chad Morganlander, portfolio manager at Stifel Nicolaus. "I would look more at the product cycle for Apple as well if they're actually innovating and if customers are actually moving towards their products."

(Watch: Apple rumored to reach beyond the touch screen)

Morganlander's firm, Stifel Nicolaus, makes a market in Apple securities and is bullish on Apple. Stifel Nicolaus estimates a price of about $600 per share within the next twelve months, says Morganlander. Nonetheless, he does have a caveat – the company's releases have become more "evolutionary" than "revolutionary".

"Twelve to 18 months out, you have to really take a look at that and make a careful determination," says Morganlander. "But, from a value perspective, this stock does look cheap."

Katie Stockton, Chief Technical Strategist at BITG, thinks there is at least some connection between Apple and retail.

(Read: U.S. jury awards Apple $290.45 mln in retrial against Samsung)

"Apple is more of a turnaround play, which is actually more characteristic of the broader retail sector than it is of the broader technology sector," says Stockton. And, she sees momentum favoring Apple.

"You're seeing some rotation into [Apple] that is promising," says Stockton. "It's not a highflyer and I don't really expect it to be [but] now its entering what looks to be a more sustainable uptrend."

To see the key levels in Stockton's charts and to get the rest of Morganlander's take on Apple, watch the video above.

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