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Can Cyber Monday Save Apple ETFs?

The tech space has been undergoing a bloodbath in the ongoing fourth quarter, mainly due to overvaluation and rising rate concerns. To make the matter worse, some sector biggies played special roles, among which Apple Inc. AAPL was at the front line.

A slump in Apple shares in mid-November caused a rout in the tech space.The company’s main supplier for its Face ID technology, Lumentum Holdings Inc. (LITE), cut its revenue and profit forecasts due to lower orders from a major customer. Apprehending that this customer could only be Apple, panic spread across the market (read: Apple Woes Trigger Tech Sector Rout: ETFs Under Threat).

Also, at the start of the month, Apple said sales for the all-important holiday quarter could fall shy of Wall Street expectations. This along with fears of falling sales in iPhones has pushed Apple shares about 22.2% down so far in November.

Now the question is, is the selloff is overdone and Apple up for a rebound? Let’s dig a little deeper and see if there are any drivers that could boost Apple shares again.

Black Friday & Cyber Monday Deals

There are deals like having a $50 Apple Store Gift card on buying the Apple Watch Series 3, a $50 Apple Store Gift Card while purchasing a HomePod, or a $25 gift card if you purchase an Apple TV, $200 Apple Store Gift card on purchasing select Mac models, a $50 Apple Store Gift Card for iPhones and a store Gift card of up to $100 on select variants of iPad.

Also, consumers can buy products from partners like Amazon AMZN, Walmart WMT and Best Buy Co. Inc. BBY. Some of the best Cyber Monday deals for Apple are $150 off on Apple iPad Pro (10.5-inch, Wi-Fi, 512GB), up to $140 off on Apple iPad mini 4, $50 on Apple iPad (2018 Model, Wi-Fi, 128), up to 37% discount on a wide array of iPad mini and Air & Pro Tablets at the Amazon Cyber Monday sale.

Is It a Value Product Now?

Apple shares belong to a top-ranked Zacks industry (top 21%) and a top-ranked Zacks sector (top 44%). The stock has a VGM Score of A. The stock has a Zacks Rank #3 (Hold).

Going by valuation metrics, the forward P/E of AAPL is 12.9 times versus the industry-average of 13.5 times. Return-on-equity of Apple is 48.7%, higher than industry average of 39.9%. Plus, both return-on-assets and return-on-capital of Apple are higher than the industry measures. Estimated 3-5-year EPS growth of Apple is now 10.4% versus 9.3% of the industry measure.

Though there are metrices like P/Book and P/Sales of Apple that are still-inflated at the current level, the valuations got corrected to a large extent in recent times.

Will Higher Margins Make Up for Declining Sales of iPhones?

Apple seeks to focus on the software and services side in the near future. “With the increased retail price of the leading iPhones, and the increasing margins of the devices further down the portfolio, it’s likely that Apple’s revenue and profit will remain high,” per an article published on Forbes.

Warren Buffett Loves Apple

Buffett is outright bullish on Apple. Berkshire added 522,802 shares of Apple in Q3, which now makes up about 25.77% stake in the Berkshire portfolio, up from 23.84% the prior quarter. Berkshire first tapped Apple shares in early 2016 when the former occupied just 5% of latter’s outstanding shares.

What Do Technical Indicators Say?

Apple’s short-term moving average is well below the long-term average as depicted by the 200-Day SMA and medium-term as indicated by the 50-Day SMA in the chart below. This suggests bearishness for this ETF in the near term. However, the fund’s medium-term averages are higher than the long term.

Also, the Relative Strength Index for AAPL stood close to 26.92 reflecting an oversold position. So, we can expect some pain in Apple and the related funds before an uptrend is set in motion (read: Should You Take a Bite Into the Beaten-Down Apple ETFs?).

ETFs to Play

So, investors expecting a rebound in Apple shares in the medium term, can play the below-mentioned ETFs with considerable exposure to Apple (see all Technology ETFs here).

Vanguard Information Technology ETF VGT – Apple has 19.1% exposure and holds the top position.

Select Sector SPDR Technology ETF XLK – Apple holds the top spot (18.3% weight).

 iShares U.S. Technology ETF IYW – Apple has 16.0% exposure and the top position in the basket.
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