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Why now is a good time to buy Apple

Talking Numbers

Why now is a good time to buy Apple

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Why now is a good time to buy Apple

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When everyone else was beating up Apple shares two weeks ago, the company was quietly buying $14 billion dollars' worth of its stock on the cheap.

So, as the stock took an 8% hit the morning after it said holiday iPhone sales were lower than anticipated, Apple took advantage of the situation buy gobbling up a few million shares.

But, should investors join Apple in the buying?

The charts say yes, according to Steven Pytlar, Chief Equity Strategist at Prime Executions.

"The charts look really good in Apple," says Pytlar, who sees the stock coming off a base of support built up between April and July of 2013.

(Read: Apple buys back $14 billion of its stock since Q1 results)

"Over the past several months, we've seen a number of higher lows," says Pytlar. "What that tells us is that the basing process has likely ended. Buyers are coming back into the stock. They're accumulating it. We think it can continue to head higher."

While Pytlar doesn't know if and when the stock could get up to its all-time highs above $700 per share, he believes it could move in the high $500 to $600 range.

However, Chad Morganlander, portfolio manager at Washington Crossing Advisors, says Apple has many obstacles ahead for the company. He believes the company needs a game-changing product to move the stock considerably higher.

"There's a big concern that the next generation of cellphone or device won't have the 'get up and go' like the previous products," says Morganlander, whose company has a price target of between $625 and $650 within the next 12 months for Apple. "Switching costs from one cellular device to another [is] very low. So, this company has to continue to innovate."

While the company is estimated to end its fiscal 2014 with over $181 billion in revenues, Morganlander notes that represents single-digit growth for company that used to upwards of 20% annual growth on its topline number.

(Read: Apple shareholders should reject Icahn's buyback proposal - proxy advisor)

"There is competition from Google [and] from the likes of Amazon," says Morganlander. "Unless they [Apple] are able to innovate and have another technological advance where consumers are all lining up to purchase it, you're going to start to see margins erode as well as revenue growth start to decelerate – and perhaps go negative."

Nonetheless, Morganlander thinks his company's price target at a minimum of $625 is entirely possible but he stresses that the Apple's long-term prospects may be dimmed because of competition.

"You want to have this in your portfolio for the time being," says Morganlander. "But, you don't want to continue just to buy and hold this thing for the next five years."

To see the rest of the discussion on Apple with Pytlar on the technicals and Morganlander on the charts, watch the video above.


More from Talking Numbers:

Two charts saying buy
Dr. Doom: Tech stocks even more overvalued now than in 2000
Why Dunkin' Donuts is eating McDonald's breakfast

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