OK, it is that time again. The earnings release that I wait for with much anticipation every quarter. Apple (NASDAQ: AAPL) shares have actually moved up dramatically over the last several months as has the market in general. I personally have been looking for a pullback in the overall market for about 4 weeks now. With this in mind I actually sold part of my AAPL stocks at around $184 and have seen the stock price go up to around $190 after that.
So, maybe I was wrong in selling part of my holdings. But I like to think that it is all part of risk management. There could easily have been the expected pullback in the overall market and that would probably have pulled back AAPL as well. It may still happen. Time will tell.
So, what is my strategy for AAPL now. I am not going to buy any more stock unless the stock price goes back down to around $140 or so. That may be unlikely in the very near future — but not an unthinkable scenario. The quarterly results come out Monday 10/19 after market close. The stock price closed at $188.05 and was down slightly in after hours trading. The 52-week high and low are $192.32 and $78.20 which is a wide margin. So, we are definitely talking about a volatile stock here. The current P/E ratio is 32.82 which I think is still a reasonable one. The majority of the analysts still rate it as a strong buy.
So, what are my expectations for the stock price in the near term? My hunch is that AAPL will beat analysts estimates on revenue and profits (as it consistently does every quarter). But I feel that this expectation is, to some extent, built in to the stock price already. Hence I do not expect the price to move up much beyond the $192 level immediately after the earnings release. My tops for the immediate bump after earnings release for the stock price is $195. Then, soon after, I still do not rule out the possibility of a pullback down to around $180 or so.
So, seems like the range I am setling for AAPL is between $180 – $195 for the near term. This could be a good basis for an options strategy. This will be the focus of my next level of analysis.
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