Apple stock (ticker $AAPL) was a rocket ship in the second quarter of 2020.
Investors must have seen, in disbelief, shares climb 44% in a matter of only three months – see chart below. This was Apple’s best quarter on Wall Street since 2012, and its fifth best in the current millennium. Even the FAAMG ex-Apple group was left in the dust.
- The strong performance followed a 13% dip in the first quarter that was better than the S&P 500’s 19% decline.
- Last year, Apple’s stock price had already risen by an astonishing 89%.
Year-to-date, shares have climbed 26% in only six months, while the S&P 500 is only now approaching the breakeven point. Also, Apple has outperformed the information technology (ticker $VGT) and consumer discretionary (ticker $VCR) sectors by at least 9 percentage points so far in 2020.
A straight and uninterrupted climb
Take another look at the blue line above. Notice that, in the second quarter, Apple did not correct much on its way up. The share price climb was relentless and almost uninterrupted. At worst, shares gave up 6.5% from the intra-quarter highs about one week prior to a decent fiscal second quarter earnings report. The pullback, by the way, was less severe than the S&P 500’s 7% retreat at one point.
In addition to a late April earnings release that seems to have pleased investors, a few factors impacted share price in the quarter:
- WWDC: the annual developers event turned out to be a bullish trigger. During it, Apple announced updates to the main operating systems and a shift in its Mac hardware strategy – I covered the keynote speech in detail, minute by minute. By the end of WWDC week, Apple stock had outperformed the S&P 500 by a sizable 4 percentage points over the previous five trading days.
- Sell-side love: Wall Street seems enamored with Apple. I have counted 10 ratings upgrades or price target increases in the past few weeks alone. Sell-side bullishness has been grounded primarily on the 5G supercycle, the success of WWDC and Apple’s services portfolio.
- Store closures: Apple lost momentum in June, when the company began to shut down stores in the US due to a resurgence in COVID-19 cases. Share price wobbled along with the broad market but found stability again in the last few days of the quarter.
Below is a chart that compares the performance of Apple stock against the S&P 500 and the industry. Notice that Apple’s dashboard has been flashing green, and shares currently trade well above their 50-day and 150-day moving averages.
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(Disclaimers: the author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)