What to Do with Apple Stock at All-Time Highs

AAPL Stock Has Managed to Break Free of the Market Slog. Is the Rally Over, or Just Heating Up?

As the stock market approaches six full months of stasis, very few stocks are at 52-week highs, much less all-time highs. One of the few that is happens to be the most recognizable company on the planet: Apple (AAPL). With Apple stock at all-time highs while most other stocks have languished, does that mean AAPL could head to the stratosphere once the market gets its act together?

Not according to our Crista Huff.

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Crista has been an Apple stock bull for some time, recommending it to her Cabot Undervalued Stocks Advisor subscribers last November, when it was trading at 203 per share. It’s currently up to 237, a 16% gain, nearly triple the 5.8% gain in the S&P 500 over that span. AAPL’s outperformance since the beginning of May, when the market started to encounter this seemingly endless turbulence, has been even more pronounced. It’s up 18.5% since May 1; the S&P is up less than 1% during that time (see chart below).

Apple stock at all-time highs - while the market has floundered.Why has AAPL taken flight while most other stocks have been grounded? Its soon-to-be-released Apple TV+ streaming service, which was priced at a user-friendly and Wall Street-approved $4.99 per month, has been one catalyst propping up Apple’s share price. Two consecutive earnings surprises have helped too.

Above all, perhaps, was the stock’s low price-to-earnings ratio; it still trades at just 20 times earnings even after its recent run-up. After a rough end to 2018, AAPL became an undervalued stock. And with market rotation heavily favoring value stocks over growth stocks of late, at some point investors started viewing AAPL as a value stock—something it’s hardly ever been considered to be.

Crista hopped on AAPL stock in the midst of its roughest patch, precisely because it had become undervalued. Now, despite the still-low P/E, Crista no longer thinks Apple stock is undervalued. Thus, she has “retired” the stock from her “Buy Low Opportunities Portfolio” – meaning she no longer thinks the stock has much short-term upside, though she still likes the stock “as a long-term hold for people who prefer to minimize portfolio turnover.”

Said another way: AAPL probably won’t outpace the market by 18% over the next six months. But that doesn’t mean it won’t remain a solid long-term investment.

However, there are better growth and value opportunities out there. In fact, Crista currently lists 25 of them as either “Buys” or “Strong Buys” in her Cabot Undervalued Stocks Advisor portfolios. To learn their names, click here.

In the meantime, keep an eye on Apple stock at all-time highs, if you’re one of the many investors who own the stock. It might not have an immediate comeuppance – in fact, it’s more likely to run in place for the next two weeks prior to its October 30 earnings date. But it’s no longer the oversold bargain stock it was earlier this year.

Chris Preston

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Investment analyst and Chief Analyst of Cabot Wealth Daily, Chris Preston brings you all the latest from the investing world. Sign up to get updates and breaking news delivered FREE to your inbox. Get unlimited access to our library of complimentary investing reports.

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