Apple is at an all-time high, but has the stock gone as far as it can go?
The tech giant is up nearly 34 percent year-to-date and is now valued at $627 billion, making it the world’s most valuable publicly traded company of all time (in nominal terms, at least). To put it in perspective, Apple is valued at 55 percent more than the market’s second-largest company, Exxon Mobil.
Should Apple shares stay positive for 2014, it will mark the sixth consecutive year the stock has been up. Since 2009, Apple’s value has nearly quadrupled.
And Erin Gibbs, equity chief investment officer at S&P Capital IQ Global Markets Intelligence, still thinks the stock is a “buy.”
“I don’t expect it to be up another 30-plus percent over the next nine months – I do expect that to slow down somewhat,” said Gibbs, who has over $13 billion in assets under advisory. “But I see it as attractively valued.”
That statement may seem incongruous with Apple’s enormous valuation but on a relative value basis, Apple is priced fairly low, Gibbs argues.
“It’s only trading at about 14 times forward earnings,” she said. Gibbs notes that with the S&P 500 is trading close to 16 times next year’s expected earnings, and the company’s technology peers trading near 20 times earnings, Apple looks relatively inexpensive.
“You have a favorable growth and favorable pricing,” Gibbs said. “For us, it’s still a ‘buy.’”
The charts look positive as well, according to Steven Pytlar, chief equity strategist at Prime Executions.
Looking at a one-year chart of Apple, Pytlar says the stock has recently broken out of a consolidation phase that began over the summer. It reminds him of how the stock traded from November 2013 to late April 2014. After breaking above that consolidation, Apple’s stock rallied from around $80 per share to over $100 in just four months.
Nonetheless, a slight dip in the stock may be ahead in the near-term, Pytlar warns.
“It would be healthy in the very near-term – the next couple of weeks – to see a pullback to retest that consolidation phase,” he said. Such a move would bring Apple shares down to near $103.30 per share, its Sept. 2 highs. But from there, he sees the stock moving higher by about $5.40, the size of the most recent consolidation range. That would put his target at roughly $108.70.
“We would remain positive looking forward,” Pytlar said.