Apple Stock: Highlights After The First Week of 2021

After the first week of 2021, Apple stock moved 1% down in the past five days. Below are the main topics discussed along the week.
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Many experts agree: Apple is a top stock for 2021

A look around the market reveals that many top experts remain very bullish on Apple. Here is what three of them have been saying about the stock for the next 12 months.

  • Loup Ventures: top FAANG stock

Venture capital firm Loup Venture says that Apple should be the top performing of the FAANG stocks (“N” is for either Netflix or NVIDIA, rather than “M” for Microsoft) in 2021.

“Growing anticipation of new business segments that likely won't launch until 2022 at the earliest. We expect hardware subscription offerings that build toward a 360° bundle, along with growing optimism around a massive expansion in the company's addressable market with Apple Car.”

  • Barron’s: one of 10 best

Barron’s is a very closely followed business and finance magazine. Its stock recommendations are often cited as drivers of share price movements.

“The work-from-home trend and the new Apple-designed M1 chip have re-energized the Mac laptop franchise. Sales are surging for devices including watches and the new $549 AirPod Max over-the-ear headphones, which are sold out into the first quarter. Then there is a lucrative and annuity-like $60 billion services business, with new offerings like Fitness+.”

  • Kiplinger: top 15

Kiplinger is still a powerhouse in personal finance. The magazine lists its top 15 tech stocks for 2021, and Apple (barely) makes the cut, at number 15.

“While consumers might be enamored with the latest flashy devices that Apple is putting out, investors should pay close attention to the Services division. AAPL could be one of the best tech stocks to own as it builds on its dominant market share and squeeze additional cash from users via its services in 2021.”

Data Mounts On The Success Of The iPhone 12

The iPhone flopped in fiscal fourth quarter 2020, driven by the delayed release of the 5G model. But the story is about to be flipped on its head, as analysts report strong demand for the device in the holiday period.

  • Wedbush: better than best

Analyst Dan Ives has been an Apple bull for a long time. He tends to offer a base-case and a best-case scenarios for financial performance and stock price upside.

“The supply chain is expecting low to mid 90 million iPhone unit builds for the quarter, comfortably ahead of the 80 million to mid 80s range expected in mid December, 75 million expected in late October and 65 million to 70 million range expected three months ago.”

  • JPMorgan confirms high demand

Dan Ives was not the only one to sound the bullish alarm on the iPhone 12 lately. JPMorgan chimed in, when its analyst Samik Chatterjee stated:

“Aggregate lead times for 12 Pro still remains quite robust and above 20 days, implying continued robust demand.”

  • The Apple Maven’s take

The recent sell-side reports have been confirming a trend that the Apple Maven has recently discussed: the 5G super cycle is well underway. The 30% increase in iPhone production reported by Japan’s Nikkei Asian Review in December largely matches the 35% rise from original forecasts reported by Wedbush.

Investors have good reasons to be that much more confident (and optimistic) about the iPhone’s holiday quarter financial results.

Apple stock: How senate control matters

To the surprise of many, Senate control will likely shift back to the Democratic party for the first time in six years. Judging by market action, investors clearly see the recent developments as a negative for Big Tech stocks.

  • Why so bearish?

For years, FAAMG companies have been under the microscope. Legislators fear that these players may have become too big and influential, and that their massive competitive advantage could be hurting smaller businesses and, ultimately, the economy at large.

The other problem, although probably a lesser one, are corporate taxes and rules around cash repatriation.

  • Slim majority, bipartisan scrutiny

I believe that the investors’ fears summarized above are reasonable, but they may be a bit short-sighted.

First, the Democratic majority in the Senate, if confirmed, will be minimal. 

Second, the antitrust risk faced by Big Tech is largely bipartisan.

Third, a Democratic federal government is also likely to be much more laxed on fiscal stimulus associated with the COVID-19 crisis and companies like Apple could be beneficiaries in the short term.

  • A word on market action

Regarding market action, Apple and its peers could suffer from a rotation into small cap and value stocks. This is the case because more government spending to support the economy in the early stages of its recovery, a flagship policy of the Democratic party, will likely benefit cyclical stocks more than it would Big Tech.

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Apple Earnings Preview: Killer Quarter Ahead

The Cupertino company is scheduled to release fiscal first quarter 2021 results on Wednesday, January 27. The Apple Maven will cover the event via Live Blog. Check out last quarter’s coverage for a taste of what to expect at the end of this month.

What Wall Street expects

According to Stock Rover, consensus estimate for revenue growth in fiscal first quarter is just a bit above 11%. If achieved, this would be quite an improvement over last quarter’s 1% top-line increase.

Earnings per share, or EPS, is estimated to come in at $1.39. At these levels, the bottom-line climb over fiscal 2020 would also hover around 11%.

Apple Maven’s observations

Consensus revenue of $102.7 billion suggests, in my view, that analysts anticipate Apple’s quarter to be quite solid, as total sales exceed the twelve-digit mark for the first time ever (i.e. $100 billion or more). It also points at the best quarterly growth rate in revenues since fiscal 2019, at least.

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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)