Is the Bottom in for Apple?

04/09/2020 5:00 am EST

Focus: TECHNOLOGY

Crista Huff

Editor, Cabot Undervalued Stocks Advisor

Apple Inc. (AAPL) recently released a new COVID-19 app and website to help people stay informed and take the proper steps to protect their health during the spread of COVID-19, based on the latest CDC guidance, notes Crista Huff, editor of Cabot Undervalued Stocks Advisor.

In March, the company closed all retail stores outside of China but reopened their retail stores in China, where iPhone manufacturing also resumed.

Apple continues to deliver revenue growth and new technologies. Their new 5G iPhone is due out in September 2020. Their services revenue has grown faster than expected in recent quarters.

Wall Street expects annual revenue to grow from $260 billion in fiscal 2019 (September year end) to $269 billion in 2020 and $303 billion in 2021.

Earnings estimates peaked in early February and have since come down due to the impact of the virus pandemic on global commerce. Analysts are now forecasting $12.83 and $15.25 EPS in 2020 and 2021 (September year end), reflecting 7.9% and 18.9% growth rates. The 2020 P/E is 19.9.

The company typically announces a dividend increase and a new share repurchase authorization annually, in late April. The last quarterly dividend increase was 5.5%, from 73 cents to 77 cents, and the last two repurchase announcements amounted to $75 billion and $100 billion.

There aren’t too many bullish recommendations for stocks coming from Wall Street lately. However, on March 25, Deutsche Bank raised their recommendation on AAPL to Buy.

The stock appears to have bottomed in late March, and has begun its rebound. I recommend that investors build a position in AAPL. I rate the stock a "Strong Buy".

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