Can Apple Break Higher?

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With shares of Apple (NASDAQ:AAPL) trading around $529, 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, portable digital music players, and a variety of related software, services, peripherals, networking solutions, third-party digital content, and applications. The company’s products and services feature the iPhone, iPad, Mac, iPod, Apple TV, a portfolio of consumer and professional software applications, the iOS and OS X operating systems, iCloud, and further accessory, service, and support offerings. Apple also delivers digital content and applications through its iTunes, App, iBook, and Mac App stores.

Billionaire activist investor Carl Icahn said he saw no reason to keep demanding that Apple increase its stock buyback plans, citing the company’s recent stock repurchases as well as an influential proxy adviser’s call against his proposal. In a letter to Apple shareholders on Monday, Icahn wrote that he had decided to ditch his nonbinding proposal, “especially when the company is already so close to fulfilling our requested repurchase target.” For months, Icahn has been asking Apple to boost its plans for a stock buyback program, proposing it give back $50 billion more. On Sunday, Institutional Shareholder Services Inc. recommended that shareholders vote against Icahn’s proposal, saying such a motion would “micromanage” how the company uses capital.

Icahn wrote that, “In their recommendation, ISS points out, and we agree, that ‘on the spectrum of options for allocating capital, the board appears to have been sluggish only in returning excess cash to shareholders,’ and even though the company has in place ‘one of the largest buybacks in history,’ we agree with ISS that this effort seems ‘like bailing with a leaky bucket’ when ‘given the scale of the company’s cash reserves.’” Apple Chief Executive Officer Tim Cook told the Wall Street Journal last week that the company had repurchased $14 billion of its stock in the two weeks since it reported disappointing first-quarter results.

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