Merrimack Pharmaceuticals. (PRNewsFoto/Merrimack Pharmaceuticals, Inc.)
TipRanks has looked at different elements of the market, including expert sentiment, news and crowd wisdom and other data points that are usually only available to hedge funds, and combined them into one simple score for each stock. We visualized the results so that investors can make an easy decision of whether Apple Inc. (NASDAQ:AAPL) is a Buy or a Sell. At the time of writing, Apple has a TipRanks overall score of 7.7 out of 10, easily beating the technology sector average score of 6.
We can also break down each element for a deeper understanding of how the score is calculated:
Wall Street Analysts
Historically, analysts have always been bullish on Apple. In fact, for many years there was not a single sell rating, and when there actually was one in late 2015 (made by Berenberg Bank) the analyst responsible, Adnaan Ahmad, lost his job saying that he had suffered a “fair amount abuse” for his bearish stance. The current 12-month price target collected from 35 analysts from prominent research firms and banks is $139.19 and the rating is a strong buy. When filtering out all the underperforming analysts we see the strong buy remains and the price target moves to $143.1.
On February 21, the Daily Analyst Recommendations tool reveals that 4-star Morgan Stanley analyst Kathryn Huberty rated Apple a buy with a $154 price target based on strong predicted iPhone sales in China of $260 million. In fact, the analyst anticipates China will “contribute outsized growth” in the fiscal year of 2018 due to 1) a larger base of users requiring upgrades and 2) Apple taking users from local Chinese smartphone brands.
We found at TipRanks that financial bloggers tend to outperform ratings from FINRA registered analysts, and we always take the general blog sentiment very seriously. Actually, we calculated that following the top bloggers generated annual returns of 19.7% with a Sharpe ratio of above 2.
When looking at what the top bloggers are saying we see that 88% are still very bullish especially when compared to other stocks in the same sector that has an average of only 65% bullish bloggers.
It is important to mention that there are top bloggers who are bearish for the following reasons:
- Amazon taking over some of Apple’s business (namely streaming boxes and tablets)
- Overhyping of the upcoming iPhone 8 release, and a subsequent “super-cycle”
- Falling behind on AI and machine learning as competitors speed up
When looking for data driven signals that move big companies, we always find the insider activity to be extremely predictive. As a matter of fact, if you followed CEO’s only in 2016 and held each position for 3 months, you would have made an average return of 3.74% with a success rate of 62%. The insider hot stocks tool enables investors to find stocks that exhibit strong buy indicators based on four different trading strategies- including tracking CEO insider transactions.
If there is one group that think its time to dump Apple stock then that appears to be the corporate insiders. Apple has a very negative insider sentiment compared to the sector average. $12 million worth of AAPL shares have been sold by insiders in the last three months with SVP Craig Federighi selling $9.5 million of AAPL shares on Feb 18. And as a result, Apple’s corporate insider score of 0.1/10 drags down the overall AAPL score considerably- especially as all the other elements of the score are so bullish.
Hedge Fund Managers
Analyzing 13F forms from the SEC allows us to track what the most prominent hedge funds are buying. We tend to call this “Smart Money”. Warren Buffett recently increased his position in AAPL by 276.68% to $6.64 billion in capital.
The “Oracle of Omaha” as Buffett is called now has AAPL as the seventh biggest stock in his $147 billion portfolio. The move reflects the very positive hedge fund sentiment on the stock: in the last quarter hedge funds increased their Apple positions by 41.8 million shares with other big name managers such as Ray Dalio, David Einhorn and Ken Fisher all upping their AAPL exposure.
TipRanks recently released a new news sentiment page where every stock page also has a stock news tab with news from all over the web, giving hedge fund capabilities to individual investors. We know that there is a clear correlation between news and stock performance. A recent study by data scientists at the Fed revealed that positive news stories increase stock returns within a week, but negative news predicts low stock returns for up to three months.
Apple’s news sentiment score shows how AAPL has a much higher news sentiment score (at 98%) than the sector average of 73%, however the media density for Apple this week is slightly below its weekly average.
Crowd insights are a vital element of the total TipRanks stock score, and a crucial part of TipRanks analytical capabilities. By tracking the 120,000 active TipRanks portfolios we can see that TipRanks users are very bullish on AAPL with a score of 9.4/10. In fact we recently discovered that Apple is the number 1 stock in portfolios for each age group from the under 30s through to the over 60s.
Here we have explored the market outlook on one stock, Apple, but TipRanks tracks over 5,000 stocks. You can perform the same market analysis on any of these stocks as we have done just now on Apple and discover how the different market elements- be it hedge funds or corporate insiders- are rating your stocks leading you to make better, data-driven investment decisions.