Apple has been having a rough fourth quarter, after its stock sparkled through most of 2020.
As I have mentioned recently, Apple has largely run out of headline-grabbing catalysts for the remainder of the year. But this is not to say that the stock might not move in the last month of 2020.
Today, I look at what could push Apple shares higher (or lower) in the next few weeks.
Broad market movement
In my opinion, Apple stock will more likely be “pushed around” by broad market forces, rather than driven by company-specific ones.
The S&P 500 has been on a tear since the end of the US Presidential election cycle, having climbed 11% in November alone.
The same decrease in risk perception has been providing some lift to Apple shares, but to a lesser extent. The stock has been up 5% for the month – which may look like a rounding error to investors who saw Apple rise 80% year-to-date through the end of August.
The problem is that – few will argue against it – this seems to be the time for “old economy” stocks to shine. News on the coronavirus vaccine front has encouraged investors to shift money out of stocks like Apple and other stay-at-home plays and into cyclical names.
At one point, I expect Apple to recover some lost ground relative to cyclical stocks. I do not believe, however, that the next leg up will happen in 2020, maybe not even in the first couple of months of 2021.
Granted, I can always be wrong. So it will be interesting to see what the month of December has in store for Apple investors.
The other potential driver of share price upside (or downside) is the 2020 holiday season. Apple enters it with a wide range of new devices, from the iPhone 12 to the ARM-based Mac and quite a bit in between.
Pay attention to the early read on holiday sales, which should come primarily from third party research firms and Wall Street analysts.
One such read, provided by Credit Suisse’s Matthew Cabral, has not been all that encouraging. According to the analyst, waits for certain iPhone 12 models have shortened, suggesting a more balanced demand-supply dynamic only a few weeks after the launch of the devices.
To be clear, the shopping season has barely started, with the important Black Friday still ahead. Good sales performance could encourage investors to reconsider owning Apple before the end of this turbulent year.
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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)