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2021 is not a good start for the Dow Jones Industrial Average (DJ INDICES: ^ DJI) or the broader stock market, with the Dow falling 1.7% at 1:20 p.m. EST Monday. With stimulus checks in Americans’ bank accounts and wide availability of COVID-19 vaccines in just a few months, there is plenty of reason for optimism. But valuations are historically high and talk of a market bubble could weigh on the minds of investors.
Actions of Apple (NASDAQ: AAPL) and Coke (NYSE: KO) were down Monday to lead the Dow lower. Apple stock sank despite a call to the tech giant to outperform other FAANG stocks this year, and Coca-Cola stock collapsed after being demoted due to valuation concerns.
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Apple could lead FAANG actions this year
Wolf Ventures expects Apple to beat all other FAANG stocks in 2021. The stock jumped about 80% last year, pushing the tech giant’s market cap past $ 2 trillion. dollars. It could be another big year for Apple investors if Wolf’s prediction hits the mark.
Loup based his outlook on a few factors. He expects an increase in working and learning from home to continue to drive sales of Apple’s Mac computers and iPad tablets. Together, these products account for about a quarter of total revenue and Loup expects them to increase their sales by a double-digit percentage in 2021 and 2022.
Wolf also expects demand for 5G smartphones to help Apple’s iPhone sales in the second half of the year. This should trigger a multi-year upgrade cycle, Loup believes. Longer term, Loup expects Apple to launch subscription offerings that include hardware and services, and a potential Apple Car to significantly expand the company’s total addressable market.
Wolf expects Apple to increase revenue by around 15% this year, followed by growth of around 10% in 2022. That would be impressive given Apple’s size and the maturity of the smartphone market. . Whether consumers are embracing 5G enough to dramatically increase iPhone sales is an open question. What the US and global economies look like when exiting the pandemic is also a wild card for the tech giant.
While Apple stock may ultimately outperform this year, the first day of trading in 2021 was not a pleasant one. Apple stock was down 3% in early Monday afternoon amid a large market sell-off.
Analyst loses his optimism for Coca-Cola
While Apple received positive analyst feedback to start the week, beverage giant Coca-Cola was not so lucky. RBC Capital Market analysts downgraded Coca-Cola shares to “sector performance” on Monday due to valuation concerns.
Coca-Cola struggled during the pandemic as restaurant visits plunged. However, the stock has recovered much of the ground lost since its peak before the pandemic. RBC believes that Coca-Cola management is making good decisions, but the company has no control over how things will develop in the short term. RBC maintains that Coca-Cola is fully valued, that upward revisions to BPA estimates are unlikely, and that the negative effects of the pandemic will hurt the business longer than many anticipate.
Failing restaurants and a booming movie business can drag Coca-Cola’s out-of-home sales for a while. Fewer store visits could also sting, reducing impulse purchases of Coca-Cola products. The company has shifted away from underperforming brands to refocus on its core portfolio, which could help boost profitability in a challenging environment.
Coca-Cola shares were down around 4.6% in early Monday afternoon as the analyst’s downgrade made matters worse for the stock on a weak day of the market. Coca-Cola lost about 1% of its value last year; it has already surpassed this decline for 2021.
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