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Apple (AAPL) is an iconic technology brand. The launch of the Apple iPhone in 2007 forever changed the way we communicate, generating years of tremendous growth for a titan of ever larger technology. But innovation has slowed, with a decline in Apple's profits expected for 2019. Are Apple's shares a buy right now?
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Apple Stock Price, Volume Action
The absolute record for Apple action is 233.47 in October 2018. The AAPL action is about 12% below that level. On April 8, the Apple action broke out of a graphic model cut with handle.
The ideal is to note a large volume when breaking a stock, which was not the case for out of stock AAPL. High volume indicates support from institutional investors and fund managers.
The depth of the base is 39%, which is relatively deep. IBD's research shows that bases with a depth of 40% or higher present a higher risk of failure.
The middle of the handle is just above the middle of the base. It's technically sound, but there's still a lot of potential charge or resistance for Apple stocks.
Nevertheless, the AAPL action is near the top of the buying zone by 5%.
Relative strength of the apple
The relative strength of line allows to put into perspective the performance of Apple stocks in the short and long term. The RS line, the blue line in the charts here, measures the price performance of an action compared to the S & P 500.
The RS line for Apple stocks has been on the rise since its low end of January. In the short term, the actions of the AAPL broke out in early April, which is positive. But Apple's action is well below its peak of 2018.
This reflects the fall in AAPL shares that has outpaced and survived the sharp correction in the stock market. Credit two Apple result warnings for the vacation quarter.
In the longer term, Apple's stock has not really outperformed the S & P 500 index since its peak of September 2012, aside from the temporary break-up of the summer latest.
Apple results and fundamental analysis
Our analysis of Apple stocks is not limited to the chart. In the end, profits determine the price of an action.
Apple's earnings for the second quarter of the year are expected after close on Tuesday, April 30. Analysts expect a 13% decline in Apple's earnings and a 5.9% drop in sales. With the anticipation of poor results, analysts believe that Apple could focus more on increasing its quarterly dividend and share buybacks.
During the first quarter of fiscal year, Apple's business figure fell 5%, marking the first decline in sales in eight quarters. In parallel with the decline in revenues, Apple's earnings increased only 7% in the first quarter of the fiscal year, breaking a series of seven quarters of double-digit growth.
Analysts do not expect the bleeding to stop for a moment. Apple's profit for 2019 is expected to fall by 4.6%, while sales fall by 4.5%.
Investors should generally look for stocks that generate at least 25% profit and sales growth, the better.
For a long time, Apple's revenue and sales growth has been massive, especially for such a large company.
From fiscal 2004 to fiscal 2012, Apple's annual results increased by 500%, 233%, 60%, 75%, 73%, 34%, 66%, 83% and 59%. That's what motivated such an Apple stock price. Not surprisingly, as Apple's earnings growth slowed and became more turbulent, the AAPL share showed similar characteristics.
Apple iPhone asks
Between the increased competition from Chinese manufacturers, downward pressure on average selling prices and slower upgrade cycles of devices, the big problem for the company is the dwindling demand for Apple's iPhone. Apple's flagship product operating income fell 15% to just under $ 52 billion in the December quarter. Chinese smartphone maker Huawei saw its sales increase by 39% in the first quarter thanks to a 50% increase in global smartphone shipments, which continues to gain a significant market share in China.
Despite the slowdown in unit sales of the Apple iPhone, the company is focusing on its service segment – which includes Apple Music and iCloud storage – as an increasingly important component of the business. Revenues in this segment increased 19% in the December quarter to an all-time high of $ 10.9 billion.
The company will launch its Apple TV + streaming service later in 2019, ready to compete Netflix (NFLX), the imminent Disney + Disney (DIS) and other exceptional offers.
Building quality will be a long and expensive process. Success, and especially profits, can take years and is not guaranteed.
Apple Vs. Other Top Tech stocks
The main technological values such as FAANG shares (Facebook (FB), Amazon Stocks, Apple Stocks, Netflix Stocks, and Google's Parent Alphabet (GOOGL)) are back in the spotlight after selling hard during the 2018 correction. But this is a large-cap stock that is not part of the catchy acronym, Microsoft Stock, which is trading unprecedented highs. Microsoft (MSFT) currently owns the largest market capitalization of all securities, surpassing Apple, with a 20% increase since its release from a base in February.
The stock of Amazon is about 5% lower than previous highs and extends well from a purchase point of 1736.51. Google shares were in the buy range before first quarter earnings, but declined after the report. Facebook shares have exploded on their first quarter results, but they are still trading well below the highs. And the Netflix stock has been evolving somewhat sideways for several months.
Apple Stock: a purchase right now?
Apple stocks are trading in a buying range, but their base is relatively deep and the breakout has not been accompanied by a large volume. In addition, buying a stock just before profits is extremely risky. And with the profits and sales of Apple expected to decline in 2019, the fundamental situation is weak.
Conclusion: Apple's shares are not a buy right now for growth equity investors with solid earnings and blue-chip fundamentals.
Top stocks to buy and watch
To find the best stocks to buy and watch, visit the IBD Stock List page. You'll find more ideas on our Leaderboard and MarketSmith platforms.
Follow Alissa Coram on Twitter at @IBD_ACoram for technical analysis and stock updates.
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