Apple (AAPL) - Get Report shares have been on a tear this week, rallying for five consecutive trading days to post a gain of about 7%. It's been a welcome reprieve for jittery Apple investors, who have seen the stock lose more than 30% of its value over the past year. But does this rally have legs? Is the stock finally rebounding? Experts aren't so sure, and caution investors that more volatility - and possibly selling - lies ahead before the company's shares are on solid footing.
"There's a lot of uncertainty about them reigniting growth in the short-run," said Frank Gillett, an analyst at Forrester Research. "Will the next iphone have something dramatic in it that will change its market potential? Can they do an acquisition? Can they announce a new product?"
Still, shares could advance further in the short-term based on valuation if investors believe the stock has finally bottomed.
Apple's shares, which hit a 52-week high of $132.97 on May 22, 2015 and plunged 33% to a low of $89.47 on May 12, 2016 before starting to rebound. After a five-day rally, the shares topped the $100 mark for the first time in a month, closing Thursday at $100.41.
The reasons for the sudden rally? Some are market-driven, where rising oil prices and improving macroeconomic data are driving a broader-market rally, which is carrying Apple's shares with it.
But others are Apple-specific: News that Warren Buffett's Berkshire Hathaway had recently invested more than $1 billion in Apple shares, Apple's aggressive buyback program, news that Apple plans to unveil technology at the WorldWide Developers conference in June to compete with Amazon's (AMZN) - Get Report Echo device, and scores of rumors about Apple looking at everyone from Time Warner (TWX) to Netflix (NFLX) - Get Report as possible acquisition targets. All of this helped push up Apple's shares - at least in the short-term.
However, experts contend the company needs hard market-moving news - not rumors and speculation - to truly drive a long-term rally.
"They need a game-changer," said Ivan Feinseth, chief investment officer at Tigress Financial Partners LLC. This could take the form of a ground-breaking gadget, higher dividends, more special dividends, a major acquisition, or a combination thereof.
Apple also needs to shake off the dreaded "V-word" - that the company is now a "value stock" rather than the growth superstar it's been for years. Billionaire investor Carl Icahn's decision to dump his enormous stake in Apple last month rattled growth-oriented shareholders, causing the stock to plummet to a 52-week low. And when Warren Buffett - who is a value investor - picked up Apple shares around the same time, it seemed to confirm whispers that Apple was becoming a value play - and that future growth would be stable, but slower.
Apple's enormous size makes growth tougher. "Apple is 3% of the S&P," said Feinseth. "They can't grow at 50% a year, but they still have good growth ahead of them."
"To me, it looks like a value stock with the possibility of growth if they can figure out how to ignite a new product category," said Gillett.
Experts say Apple's shares will likely rally in short spurts - with possible selloffs in between, depending on how the company faces upcoming events. Investors will be looking for details on Apple's "Siri in a box" Echo-type device at the developers conference in June, and they'll want to see if the bleeding has stopped when it reports its fiscal third quarter results in July. (Apple jolted investor confidence in the fiscal second quarter when it posted its first ever year-over-year decline in iPhone sales and first company revenue decline in 13 years. Part of Apple's weak results were related to the tough year-over-year comparisons with 2015's phenomenal iPhone 6 sales).
But Apple's D-Day for investors will likely come in September when it unveils its new iphone and latest devices. Investors need to see that Apple still has its mojo to create mind-bending new gadgets that will lead - rather than follow - other tech firms.
If it misses the mark on any - or all - of these events, its shares could sell off.
A major acquisition could also push Apple's shares to new highs. With Apple currently sitting on more than $230 billion on its balance sheet, there's not much it can't buy.
Rumors have swirled for many months of a possible Tesla (TSLA) - Get Report acquisition, which would move Apple into the hotly-popular driverless car arena. Its decision to take a $1 billion stake in Didi Chuxing, Chinas's Uber-like ride-hailing service, earlier this month, fueled speculation further on Apple's interest in smart cars.
More recently, M&A chatter has escalated about Apple looking at Netflix and Time Warner as possible targets. This would fit with Apple's interest in offering original programming as part of an Apple entertainment subscription service.
A Walt Disney Co. (DIS) - Get Report deal sounds particularly plausible, said Feinseth. After all, Steve Jobs's widow, Laurene Powell Jobs, is Disney's largest shareholder with a 7.9% stake. (Jobs got the Disney stake when he sold his animation studio Pixar to Disney in 2006).
Still, any major acquisition must be strategic - not willy-nilly, experts warn.
"People have had their heads chopped off in Silicon Valley who did acquisitions for the sake acquisitions," said Feinseth. "Look at Carly Fiorina, Mark Hurd and all the rest - the streets are littered with the carcasses of megalomaniac ego acquirers."
Regardless of how it plays out, the bulls still believe in Apple's long-term future. Cowen & Co's Tim Arcuri has a $125 price target on the stock while Feinseth is even more bullish.
"We think the stock will be $160 within the next 12 months, and those who buy it now and are patient, and don't listen to all the noise and endless debate that's going on will be rewarded," said Feinseth. "We think Apple's best days are still in front of it."
This article is commentary by an independent contributor. At the time of publication, the author held TK positions in the stocks mentioned.