Can Apple Be The Stock It Once Was?

With shares of Apple (NASDAQ:AAPL) trading around $449.98, is AAPL an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Apple designs, manufactures, and markets mobile communication and media devices, personal computers, and portable digital music players, and a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications. The company’s products and services include iPhone, iPad, Mac, iPod, Apple TV, The App Store, a portfolio of consumer and professional software applications, the iOS and OS X operating systems, iCloud, and a variety of accessory, service and support offerings. Apple has revolutionized many products and has given then an aesthetic spin over the last several years. Many consumers long for an Apple product, if they do not already have one. As an increasing number of countries are exposed to Apple’s products, demand will continue to rise and so will profits for this innovative giant.

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T = Technicals on the Stock Chart are Weak

Apple stock has been a brilliant pick over the long-term. However, the stock has retraced significantly from its highs established last year. Currently, Apple stock is attempting to stabilize and possibly bounce back. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Apple is trading around its declining key averages which signal neutral to bearish price action in the near-term.

AAPL

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Apple options may help determine if investors are bullish, neutral, or bearish.

Implied Volatility (IV)

30-Day IV Percentile

90-Day IV Percentile

Apple Options

26.58%

3%

0%

What does this mean? This means that investors or traders are buying a minimal amount of call and put options contracts, as compared to the last 30 and 90 trading days.

Put IV Skew

Call IV Skew

May Options

Average

Average

June Options

Average

Average

As of today, there is an average demand from call and put buyers or sellers, neutral over the next two months. To summarize, investors are buying a minimal amount of call and put option contracts and are leaning neutral over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.