Apple Stock Prediction: Investing in the Future
The article was written by Jacob Saphir, a Financial Analyst at I Know First.
Apple Stock Prediction
“It’s not about charisma and personality, it’s about results and products and those very bedrock things that are why people at Apple and outside of Apple are getting more excited about the company and what Apple stands for and what its potential is to contribute to the industry.” Steve Jobs
Summary:
- Apple, Inc. recovers stock loss form aftermath of the 2016 US election
- Strong fundamental despite unfavorable currency rate
- Apple Service becoming the fastest growing business segment
- Revitalizing the iPad
- Investing in Research and Development
- I Know First’s algorithm indicates a bullish signal for AAPL
Background:
Apple, Inc. has been a pioneer in the technology sector for seeking new innovations to continuously challenge our capabilities. The introduction of the iMac, iPad, iPod, and iPhone changed the way we live and access information. In the volatile technology sector, a word of mouth or the introduction of a new technology can determine a company’s fate. Earlier this year, Donald Trump’s comments from his tweet to boycott Apple for failing to share cellphone info with the FBI in February to proposing a 35% tariff to encourage companies to manufacture domestically, left investors with a gloomy look of Apple’s future. How would Trump’s policy impact Apple’s future profit during his term as president? Since Trump’s victory in the 2016 US election, many speculated Apple’s stock along with the technology sector to decrease in value. However, despite the stock’s initial decline, it has risen beyond its price level on the day of the election. So, what is causing the stock to rise? Why does the market have a bullish view for Apple? To answer these questions, one has to look at Apple’s fundamentals, diversifying its revenue source, investing in its future.
Fundamental:
iPad:
Over the years, the iPad has seen it popularity decline. However, Apple is searching for a way to revitalize the product. In a previous article from I Know First, the company will releasing a new iPad Pro, featuring Apple’s largest screen of 12.7 inches. If the iPad Pro becomes a success, it will fulfill CEO Tim Cook’s vision of “the iPad Pro [as] a replacement for a notebook or a desktop for many, many people. They will start using it and conclude they no longer need to use anything else, other than their phones.” If Apple increases the size of the screen, it may influence buyers to purchase this product as Steve jobs once predicted the world entered a “post PC era” with its introduction in 2010.
Teaching the future:
Apple invests over $10 annually into research and development. Besides investing in the products, one of Apples main drive is creating an ease in creating apps for developers. If Apple wants to overtake Android as the leading market share in the smart phone industry, it needs to invest its resources in influencing its app development platform, Swift. CEO Tim Cook, knew about this and as a result expanded the research and development into China and opened its first iOS Developer Academy in Naples, Italy. The program proved such an interest that before the semester started, applicants surpassed capacity. Apple plans to increase capacity into the future. Investing in future products, applications, and developers through education is vital for Apple in this highly competitive market to increase its market share.
Conclusion:
We are maintaining a bullish forecast of the stock. I Know First’s algorithm forecast the stock as a potential long-term investment.
Past I Know First Forecast Successes With AAPL:
In such as the one dated on March 18, 2014, the algorithm accurately forecasted a bullish signal for AAPL. In its 1 year time span since the forecast’s release, the stock increased by over 70%.
In another example, the algorithm accurately forecasted a bullish signal for AAPL on May 15, 2016. In a 3 months time span, the stock increased by 25.46%.
Below is the latest forecast I Know First algorithm released on December 15, 2016. If we were to compare the forecast back in May 15, 2016, we can see both forecasts rate Apple, Inc. as a buy. If the previous forecast accurately predicted the stock would increase and it did by 25.46%, the latest forecast below could indicate future increase in the stock’s value.
The forecast is color-coded, where green indicates a bullish signal while red indicates a bearish signal. Brighter greens signify that the algorithm is very bullish as it does at the top of this forecast. The signal is the number flush right in the middle of the box and the predicted direction (not a specific number or target price) for that asset, while the predictability is the historical correlation between the prediction and the actual market movements. Thus, the signal represents the forecasted strength of the prediction, while the predictability represents the level of confidence.