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JimVanMeerten (56.18)

Why is Apple so popular?



August 11, 2011 – Comments (0) | RELATED TICKERS: AAPL

I'd like to start a new series of articles on the stocks that are the Top 100 stocks when ranked by individual investor interest and look at them in an objective manner to see is they still warrant our attention.  Right or wrong I'll use the number of readers who have expressed an opinion on Motley Fool as my indicators of general investor interest.  Today the stock that ranks the highest individual postings is Apple (AAPL) with 26,280 Motley Fool readers expressing an opinion.  To me Apple is interesting on momentum alone when I look at this chart of price momentum provided by Barchart.

Apple Inc., (AAPL) together with subsidiaries, designs, manufactures, and markets personal computers, mobile communication and media devices, and portable digital music players, as well as sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide. The company sells its products worldwide through its online stores, retail stores, direct sales force, third-party wholesalers, resellers, and value-added resellers. In addition, it sells third-party Mac, iPhone, iPad, and iPod compatible products, including application software, printers, storage devices, speakers, headphones, and other accessories and peripherals through its online and retail stores; and digital content and applications through the iTunes Store. The company sells its products to consumer, small and mid-sized business, education, enterprise, government, and creative markets. As of September 25, 2010, it had 317 retail stores, including 233 stores in the United States and 84 stores internationally. The company, formerly known as Apple Computer, Inc., was founded in 1976 and is headquartered in Cupertino, California. (Yahoo Finance)

Barchart technical indicators:

1 - Barchart 88% overall technical buy signal

2 - Trend Spotter technical buy signal

3 - Trades above its 20, 50 and 100 day moving averages

4 - 14 new highs and up 22.47% in the last month

5 - Relative Strength Index of 83.22% that is still rising

6 - Currently trades at 399.79 which is above its 50 day moving average of 344.01

Fundamental factors:

1 - The stock is a Wall Street brokerage analysts' darling and is considered a core growth holding by most firms

2 - Brokerage analysts have 28 strong buy, 25 buy, 3 hold and only 1 sell recommendation published for their clients

3 - Sales projections are out of sight with an increase of 65.40% expected this year followed by another 22.50% increase next year

4 - Earnings are estimated to increase by 78.60% this year, 17.00% next year and continue to increase by 22.08% annually for at least 5 year

5 - Personally, I like to own stocks that have double digit forecasts for sale and earning increases and this stock fits that criteria

6 - At the present time the price/earnings ratio is 84% of its normal trailing P/E ratio

7 - The price growth persistence has been a 100 score

General investor sentiment:

1 - On Motley Fool 26,290 readers have expressed an opinion and 92% have voted that this stock will beat the market

2 - The more experienced All Stars are more optimistic with 5,385 readers giving the thumbs up by 96%Fool follows other Wall Street analysts and reveal a 57 to 0 vote that the stock will out perform the market

Summary:  This stock has been a darling of both the professional and individual investor for quite some time.  The stock is expected to have double digit increases in both sales and earnings and is still trading at about 84% of its normal P/E ratio so investors are still looking for price increases.  If everyones' expectations are met I look for an annual increase in price in the range of 25% +/- 5% for at least the next 5 years.

Jim Van Meerten is a Marketocracy Master

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