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Is Apple stock a buy amid a Mac-focused second hardware event?

By:
on Oct 17, 2021
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  • Apple will host its second hardware event on 18 October.
  • The company is expected to reassure investors its Mac is still an important part of its growth.
  • Analysts expect Apple’s earnings to grow at an average annual rate of nearly 20% over the next five years.

Apple Inc. (NASDAQ:AAPL) will host its second and final hardware event of the year on 18th October. The event is largely expected to focus on the Mac update, with the company reaffirming the importance of one of its core and founding business units’ place in its future.

Wedbush analyst Dan Ives said earlier this week that he expects the company to announce an upgraded Macbook Pro and potentially a new version of its codeless AirPods. Apple’s Mac computers have fallen down the list in the revenue mix.

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In the company’s most recent quarterly results, the iPhone continued to account for the largest shares of revenue with $39.6 billion out of the $81.4 billion reported in sales. On the other hand, Services accounted for $17.5 billion, while Macs contributed $8.24 billion.

Should you bet on Apple’s growth?

From an investment perspective, Apple shares trade at reasonable trailing 12-month and forward P/E ratios of 28.37 and 25.51, respectively. Therefore, value investors could still find it potentially undervalued based on its prospects for growth.

Street analysts forecast Apple’s earnings per share to grow by 10.20% this year, before rising at an average annual rate of nearly 20% over the next five years.

Therefore, with Apple’s services unit growing rapidly and the Macs continuing to play an important role in the company’s revenue mix, Apple’s well-diversified business offers long-term stability at reasonable valuation multiples.

Source – TradingView

Technically, Apple shares seem to have recently spiked to complete an upward breakout from a descending channel formation. As a result, the stock has now advanced to trade above the 100-day moving average.

However, with shares yet to reach overbought conditions of the 14-day RSI. The current bull run could continue in the coming week. 

Therefore, investors could target extended gains at about $150.00, or higher at $155.00. On the other hand, $138.89 and $133.39 are crucial support zones.

It could be time to buy the rebound

In summary, although Apple shares spiked 3.7% late last week, the stock still trades at reasonable valuation multiples whilst offering exciting growth prospects.

Therefore, with shares far from reaching overbought conditions, it could be time to buy the rebound ahead of its second hardware event on 18th October. 

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