Earnings season in the US unofficially begins a bit later this month. Apple stock has been climbing ahead of the Cupertino company’s reporting day, scheduled for April 28. Shares are now valued at roughly $128, which is 10% away from both the all-time high of late January and the 2021 low of March.
The Apple Maven has supported buying Apple stock at a price range of about $116 to around $120. Shares are now about 8% above those levels, reached only one month ago. Aspiring investors could be asking if they may have missed out on the opportunity.
I explain why it may still be better to buy Apple today than to wait another few days. The reason, in a nutshell, is anticipation for Apple’s fast-approaching fiscal second quarter earnings day.
Will shares rally pre-earnings again?
The chart below depicts Apple’s stock price movements over the past year. The solid green dots are three of Apple’s four most recent earnings days: fiscal second and third period of 2020, plus fiscal first quarter of 2021.
Notice that, ahead of each earnings day highlighted, shares rallied in anticipation for the financial results. In my view, the alignment of bullish price action and the earnings calendar has not been a coincidence.
We now know that Apple has done superbly through the COVID-19 period. In fiscal 2020, revenues and earnings per share increased by 6% and 10%, respectively, beating the company’s 2019 performance. The numbers were impressive and surprising, given all the pandemic disruptions.
Here is a narrative that seems to fit the data well. As earnings season approached, evidence began to surface that Apple had “delivered the goods” in the previous quarter. From the success of the M1-equipped Mac to the long-awaited rebound in Greater China, pre-earnings chatter has been overwhelmingly bullish in the past year. As a result, the stock began to rally in anticipation.
How about fiscal fourth quarter 2020? This event is marked above by the red circle. The opposite happened then: from the moment that the iPhone 12 was announced (important: with concerning delays) through earnings day, the stock fizzled as pre-earnings sentiment was dictated by the bears. Also, the US Presidential election cycle weighed on the stock until early November.
Fiscal second quarter earnings rally
This time, the macroeconomic and political backdrop is more favorable to Apple stock than it had been six months ago. Better yet, the first few earnings preview notes from Wall Street experts have started to come in, and they seem generally bullish:
- Morgan Stanley has recently raised Apple's Services revenue estimates;
- Cowen sees upside in complementary offerings like News+;
- Wedbush believes Apple will deliver better-than-expected results in the quarter.
Apple stock is currently covered by at least 30 Wall Street analysts. As more of them publish earnings previews in the next several days, it is likely that bullish momentum will pick up steam. As it does, shares of the Cupertino company could rise even more than they have in the past week.
If you did not already own Apple stock, or maybe not enough of it, would you buy shares three weeks ahead of the company’s earnings day? Leave your opinion below:
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(Disclaimers: this is not investment advice. 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)