“Clearly, Apple is a great company and it should continue to outperform the broader indices in the years to come,” Parsimony Investment Research writes for Seeking Alpha. “However, the price action has been almost parabolic over the past six months and investors should be cautious about adding to their position at current levels. Its important to note that our caution is driven by our technical fear that a broader market correction is imminent and not necessarily the current valuation of Apple stock.”
“All else being equal, Apple is probably a ‘buy’ at current levels based purely on fundamentals,” Parsimony writes. “But we all know that fundamentals sometimes take a back seat during a broader market correction. That said, we believe that there will be a downside floor on price based on valuation and dividend yield.”
Parsimony writes, “From a technical perspective, we think that the broader markets could correct 25%-30% by the end of the year. However, we think that Apple will hold up relatively better than the indices. Assuming Apple’s 80% relative correction rate compared to the broader markets from the last two corrections, we think there could be 20%-24% of downside risk for Apple shares (from the most recent high of $644.00). This equates to a downside price range of $490-$515 for the stock.”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Carl H.” for the heads up.]