Undervalued Apple Reports Earnings Tuesday

TheStreet.com

NEW YORK (TheStreet) -- Apple headlines Tuesday's earnings reports under intense scrutiny over whether or not the company can re-energize Wall Street and investors opinions that Apple products remain relevant in the changing world of technologies.

After the close last Thursday we learned what happens when investors are disappointed when major technology companies miss earnings expectations.

Google ($896.60) slumped to $860.62 afterhours on Thursday, but stayed above that level on Friday with a day's low at $875.61. Following this volatility Google maintained its hold rating and is 29.7% overvalued. The July 15 all time high at $928.00 turned out to be a test of the ValuEngine one-year price target at $927.56. Helping the stock stabilize on Friday were my semiannual pivots at $892.48 and $880.49. My quarterly and monthly pivots at $915.63 and $922.67 are now risky levels.

Microsoft ($31.40) was hit even harder than Google trading as low as $31.02 on Friday. Weakness was enough for ValuEngine to upgrade the stock to buy from hold. Given this assessment the stock should stay above its 200-day simple moving average at $29.89. My annual value levels are $28.57 and $27.92 with a monthly pivot at $32.41 and quarterly and semiannual risky levels at $33.52 and $33.95.

Assuming that Apple ($424.95) will have significant up or down volatility afterhours Tuesday, here's my buy-and-trade profile. Apple still has a buy rating and is 7.8% undervalued. My weekly value level is $404.95 with my annual pivot at $421.05 and annual risky level at $510.64. If Apple shares get sliced below $404.95 new 2013 lows are likely as this month's value level is $325.25. On a positive reaction my target is $510.64 with semiannual risky levels at $620.84 and $621.46.

Stocks continue to trade under a ValuEngine valuation warning with 76.0% of all stocks overvalued, 43.0% are overvalued by 20% or more. Fifteen of 16 sectors are overvalued, 14 by double-digit percentages.

Here is my table on data for the ten stocks reporting results on Tuesday:

Reading the Table

OV/UN Valued: Stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.

VE Rating: A "1-engine" rating is a strong sell, a "2-engine" rating is a sell, a "3-engine" rating is a hold, a "4-engine" rating is a buy and a "5-engine" rating is a strong buy.

Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.

Forecast 1-Year Return: Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the table are projected to move higher by that percentage over the next 12 months.

Value Level: Price at which to enter a GTC limit order to buy on weakness. The letters mean; W-weekly, M-monthly, Q-quarterly, S-semiannual and A-annual.

Pivot: A level between a value level and risky level that should be a magnet during the time frame noted.

Risky Level: Price at which to enter a GTC limit order to sell on strength.

Among the ten stocks reporting on Tuesday, five are rated buy and five are rated hold. Four stocks are undervalued and six are overvalued. One of the buy rated stock is a Dow component, which set a multi-year high on Friday.

Two stocks declined by 17.0% and 30.8% over the last 12 months. Among the eight winners, five had double-digit gains of 23.6% to 44.9% over the last 12 months.

The projected performances over the next 12 months range from a loss of 4.7% to a gain on 9.6%.

Broadcom ($33.69) is just below its 200-day SMA at $33.86. My annual value level is $32.91 with my quarterly risky level at $34.31.

Discover Financial ($50.62) set a multi-year high at $51.25 on July 15 after being as low as $45.08 on June 24. My semiannual value level is $48.93 with a weekly pivot at $50.00.

Freeport McMoRan ($28.56) set a multi-year low at $26.38 on Jane 24. My weekly value level is $27.34 with the 200-week SMA at $33.58.

Nabors Industries ($15.62) is just above its 200-day SMA at $15.38. My weekly value level is $14.89 with my annual risky level at $18.49.

Panera Bread ($186.30) set a multi-year high at $194.77 on May 31 then traded down to $174.18 on June 24. My semiannual value level is $179.90 with a weekly pivot at $184.74 and quarterly risky level at $188.25.

AT&T ($35.81) is positioned between its 200-day SMA at $35.63 and its 50-day SMA at $35.93. My weekly value level is $34.25 with a quarterly pivot at $36.27 and semiannual risky level at $38.14.

Travelers ($84.66) set a multi-year high at $89.00 on April 23 then traded down to $77.38 on June 24. My weekly value level is $81.54 with a semiannual pivot at $85.15 and monthly risky level at $87.88.

United Technologies ($102.48) set a multi-year high at $102.50 last Friday. My weekly value level is $98.26 with a monthly pivot at $100.89 and semiannual risky level at $107.61.

Valero Energy ($34.71) is just below its 200-day SMA at $35.08. My weekly value level is $32.72 with a quarterly pivot at $34.34 with a semiannual risky level at $34.73.

Last Thursday I profiled six companies that report their quarterly results today in Netflix, McDonald's Earnings Preview.

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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