Apple Wins the Search for Value
NEW YORK (TheStreet) -- The most popular question asked of me Tuesday at the Country Club of Orlando was what is the best value stock in the market today? Without hesitation I replied Apple (AAPL) is the clear winner.
This morning I put ValuEngine software, the daily and weekly charts and my proprietary analytics to the test to find a better choice.
My Definition of a Value Stock
I want the best value stock to be a member of the S&P 500 and for the stock to at least have a buy or strong buy rating according the ValuEngine Forecast Model. This gave me 16 stocks rated "5-Engine" or strong buy and 170 stocks rated "4-Engine" or buy.
Since the stock market remains under the caution flag of a ValuEngine Valuation Warning with 65.2% of all stocks overvalued, I trimmed the list to only those stocks that were at least 10% undervalued. This cut the list down to just 27 candidates and among them was Apple. To whittle down the list further I wanted only those stocks that were trading above $10 a share and projected to gain of at least 7.5% over the next 12 months, which is 2.5% above the 5.0% threshold needed to maintain a buy rating. The result was 10 stocks including Apple. Adding the Technical Component
My technical definition of a value stock is one that is oversold on its weekly chart. Five of the 10 finalists were overbought on their weekly charts, so the list was culled to five. Two had declining momentum and two had rising momentum. Apple wins as the only value stock with oversold momentum with a 12x3x3 weekly slow stochastic reading of just 10.39 on a scale of 00.00 to 100.00 where a reading under 20.00 is oversold. The five-week modified moving average at $456.00 and the 200-week simple moving average at $365.28.
Chart Courtesy of Thomson/Reuters
Chart Courtesy of Thomson / Reuters
Apple ($428.35) set a 52-week low at $419.00 on March 4, holding my annual value level at $421.05 on that day and again on March 5.
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