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Tech Innovation Continues to Drive Apple Stock


Interest in Apple Stock is Growing for These Reasons

On Wednesday, 27 January 2021, Apple released its Q1 financial results, ending December 26, 2020. The earnings reports were certainly impressive, with revenues up 21% (Y-o-Y) at a record $111.4 billion. Quarterly earnings per diluted share were reported at $1.68, up 35%. The company generated the lion’s share of its quarterly income from international sales, at 64%. For these reasons and many more, AAPL remains on the best stocks watchlist for February 2021.

As a socially responsible corporation, Apple has also pledged to invest $350 billion throughout the US. Apple’s cash flow amounted to $38.8 billion, but the most impressive element to date is Apple’s return to shareholders, at $30 billion during the quarter. An Apple dividend of $0.205 per share was paid on February 11. The recent earnings results were broadcast live via webcast.

Talk of An Apple Car Fuels Demand for Apple Stock

All the hullabaloo around Apple’s earnings report sent the stock surging recently, only to face a pullback in mid-February. The company is iconic; it was first out of the gates with personal computing technology, and it remains a front-runner in the industry. Thanks to the incredible success of Apple products such as iPhones, iPads, iPods, iWatches, and other tech gear, Apple remains a global game changer.

The launch of the iPhone in 2007 redefined Apple’s success forever. Over the years, customers have held onto their iPhones for longer, slowing sales and cramping Apple’s runaway growth in the stock market. Despite this, Apple is gearing up for major growth drivers with its 5G-ready smartphones. The iPhone-12 series debuted in October 2020, with pricing between $699 and $1099. These sophisticated devices feature powerful processing technology, a sleek new design, and enhanced cameras.

On a positive note, sales for these tech gizmos have been off the charts, helping to drive up Apple’s stock price. Yet, trader sentiment for Apple was lukewarm on the day that Apple scheduled an online event for the iPhone 12. The stock dropped a fraction under 3%. But a recent development – a first for Apple also helped the company to retain its strong position with Apple chip processing capabilities installed in Mac computers. This is the first time that Apple introduced this computing technology, in lieu of Intel chips.

Growth Drivers for Apple

Wearable tech and services are major business growth drivers for Apple Inc. Services revenue for the company came in at $15.8 billion in Q1 2021, up 24%. This includes Apple Arcade, Apple TV, ApplePay, Apple Music, AppleCare, the App Store, and iCloud. Despite facing scrutiny over its monopoly over apps at the App Store, the company remains highly profitable (it slashed commissions from 30% to 15%). Wearable technology has also increased in volume, with almost $13 billion reported in the quarter ending in December.

If discussions with Hyundai and Apple are to be believed, and there is little reason to doubt them, Apple could be on the verge of a tectonic shift. The company is purportedly interested in creating a self-driving EV. Barely a few weeks ago, it was reported on Bloomberg News that Apple has ambitious objectives with Kia Motors, the South Korean car manufacturer vis-a-vis electric vehicles to the tune of $3.6 billion. Apple has designs on a factory in Georgia, within the next 4 years. Recent reports that Apple has shelved its car manufacturing plans have surfaced, but the idea has got lots of investors interested.

Technical Perspective on Apple

In terms of technical factors, Apple’s spot price of $135 (February 12, 2021) is at the halfway point between the upper Bollinger band of $144.08, and the lower Bollinger band of $126.58. This indicates that the stock price is levelling out and unlikely to make any dramatic moves up or down over the short-term. In terms of moving averages, the short term moving average (50-day MA) of Apple is $130.80, and the long-term moving average (200-day MA) is $109.80. These averages are slowly creeping up towards the current price of Apple, indicating stabilization in recent days.

Momentum indicators such as the Ichimoku Cloud are still favorable for Apple, despite pullbacks in the stock. The company has posted steadily increasing revenue and earnings year-on-year, and on a recommendation scale where 1 represents a strong buy, and 5 represents a sell, Apple is regarded as a solid buy at a rating of 2. The company has beaten earnings forecasts in Q1 2020, Q2 2020, Q3 2020, and Q4 2020 (by a long margin), with a price/earnings ratio of 36.65. The recent pullback on Wall Street will naturally put a damper on bullish sentiment, but Apple has proven itself to be the gold equivalent of the volatile tech stocks.

 

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