Nasdaq Insight: AAPL Views Range Among Traders

Shares of Apple Inc. (NASDAQ:AAPL) were quoted higher in early Nasdaq trading Friday, up $1.47 to $121.54, after selling off more than 2 percent on heavier than average volume yesterday. Recent selling has brought shares of the computing giant to down to levels 10 percent below recent all-time highs. Wall Street consensus earnings per share (EPS) estimates for AAPL are for growth of 40.50 percent this year and 7.50 percent in 2016. In total, 43 analyst firms are providing revenue estimates for AAPL shares, averaging $245.42 billion for fiscal 2016.

AAPL shares had been trading in a tight price consolidation, just below recently observed all-time highs. Recent selling brings the price below recent support near $123 and brings volatility back into what had been a quiet market for the stock.

Market Observer Opinion On AAPL Shares Divided

Jim Cramer of CNBC’s Mad Money has been an ardent supporter of AAPL shares and has advised his viewers to buy shares below $120. Cramer views the shares of Apple Inc. as a “long-term” investment. He feels that AAPL shares are due for a pullback because 29 percent of the company’s business is in China and analysts are likely to cut EPS forecasts.

Cramer further comments, “Own Apple, don’t trade it.”

In contrast, market analyst and former Chief Market Strategist with William O’Neil and Company Gil Morales had this to say, tweeting, “I DO NOT buy into the line that $AAPL is a stock to “own not trade.” All stocks you buy are trades – at some point you end up selling…”

I DO NOT buy into the line that $AAPL is a stock to "own not trade." All stocks you buy are trades – at some point you end up selling…

— Gil Morales – TheOWLTrader.com & VoSI (@gilmoreport) May 6, 2015

Gil is known for actively trading stocks, while Cramer may hold shares like AAPL for several years. Both agree that significant EPS growth is necessary for any stock to make sustained increases in price. Apple’s decade-long surge in price has been fueled by long strings of quarterly EPS growth reaching 50 or 75 percent and in many cases even triple digit percentage increases. Of course, AAPL’s EPS growth is a direct result of consumer fervor for the company’s iPod, iPad, iPhone, and Macintosh Computer consumer technology lines. The company continues attempts to innovate with new products like the Apple Watch. AAPL shares are a member of both the Dow Jones Industrial Average and Nasdaq Composite Index.

Apple Inc. has a total market capitalization of $691.73 billion and 5.76 billion shares outstanding. Major institutional holders of AAPL shares include State Street Corporation, Fidelity Management and Research, Bank of New York Mellon, and JP Morgan Chase and Company. The largest institutional holder of AAPL shares is passive investing, index-fund giant, the Vanguard Group. The company’s funds own 5.68 percent of outstanding AAPL stock: almost 327 million shares as of March 31, 2015. Apple Computer was founded in 1976. Its shares are listed under the ticker symbol AAPL and traded on the Nasdaq.

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