HomeTrading NewsApple stock is smack in the middle of a perfect storm: strategist

Apple stock is smack in the middle of a perfect storm: strategist

Even with Apple’s stock (APPL) cooling down a touch this week as the company flirted with a $3 trillion market cap for the first time, pros say several positives remain in the cards that are likely to push shares higher soon.

“It is entirely possible that we are seeing the perfect storm for Apple bulls into year-end. The obvious consideration is that institutional investors are plowing into Apple in a FOMO [fear of missing out] driven frenzy. What institutional fund manager would want to appear underinvested in a phenomenally performing stock that has the highest weight in most passive portfolios?” said Steve Sosnick, Interactive Brokers chief strategist. 

That FOMO rally in Apple has been on full display this month, as Yahoo Finance tech editor Dan Howley has been chronicling.  

Apple’s stock hit its high for the year on Dec. 10 at $179.45, giving it a market cap of $2.98 trillion. The stock has pulled back about 4% from its highs amid a broader pullback in tech stocks after the Federal Reserve’s policy meeting mid-week. 

The tech giant’s current market cap: $2.79 trillion. 

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Despite the pullback, Wall Street has remained very upbeat on Apple’s prospects headed into 2022.

We are excited about the iPhone 5G. People are becoming increasingly looking at the devices as ones they want to work in,” said J.P. Morgan tech analyst Samik Chatterjee on Yahoo Finance Live

Chatterjee reiterated an Outperform rating on Apple and now sees the stock’s fair value at $210. 

Added Chatterjee, “As consumers increasingly become aware of the 5G, and the iPhone SE we will see upside here.”

Interactive Brokers’ Sosnick warns, however, that Apple could be at risk of further pullback in the near-term given valuation.

“With the stock approaching a $3 trillion market capitalization, we are amidst one of the most epic year-end ramps that I can remember. I will not dispute that Apple warrants a premium valuation. It is the most profitable company, and hence the largest component in major market-capitalization weighted indices like the S&P 500 (SPX) and NASDAQ 100 (NDX), where it comprises 7% and 12.5% of the index, respectively. Yet I do question why investors believe that the company is 20% more valuable today than it was earlier this month,” Sosnick adds.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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