2020 is nearly over, and Apple stock is on track to have its second-best year of the past decade. So far, shares have climbed 76% in this pandemic year.
Interestingly, Apple has closely followed the ten-year seasonal performance pattern below in 2020:
- First quarter started strongly, but the transition to the second period was rougher
- The stock started to pick up steam later in the second quarter, then shot to the moon in July and August
- September was weak, anticipating a fourth quarter of underperformance relative to the S&P 500
What history says about the first quarter
Back to the graph above, notice that the first quarter of the past ten years have been, on average, good for Apple relative to the rest of the market.
I believe this to be a reversion-to-the-mean phenomenon, following a holiday season that tends to be a “sell the news” period for Apple shares.
Should history repeat, Apple shareholders may be in for a solid three months at the start of 2021.
What could send Apple higher
A couple of factors could help to support Apple’s share prices in the new year. First are the financial results of the company’s fiscal first quarter – i.e. the holiday months.
There have been reports recently suggesting strength in projected iPhone 12 sales. The optimist outlook could very well be reflected in robust earnings result, which should be released on January 28.
On that same day, investors may be greeted with incremental revenue from products and services that have only been recently announced. For example, the service bundle Apple One was launched in late October, while the AirPods Max and Fitness+ saw the light of day as recently as last week.
Lastly, the market could set the rotation to cyclical sectors aside for a moment, following several weeks of outperformance in value and small cap stocks. Should this be the case, Apple may finally see a bit of investor appreciation that has been lacking in the fourth quarter.
Explore more data and graphs
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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)