Trading the Volatile Beast in AAPL - Fundamentals and Technicals

January 7, 2013 -

AAPL Quickpick Look

A Dash of Fundamentals and a Pinch of Technicals 





Apple's earnings report for Q1 FY13 will be released on January 23rd.

In an unprecedented feat, in the latter half of 2012, Apple introduced the iPad Mini, iPad 4th Generation, iPhone 5, 13-inch Macbook Pro with Retina Display, new iPod touch, iPod nano and New iTunes.

Of those products, the iPhone 5, iPad 4, iPad Mini received the best reception.This information is primarily based on my visit to several local Apple stores in the area. While the iPad 4 and iPad Mini areas were filled with people stepping over each other to try the new device, the iPod touch and iPod Nanos were off to the side ignored and neglected.

Furthermore, based on FY12 financials, seventy percent of Apple's revenue comes from iPhone and iPad related products/services. That is a scary thought. But when you look at the other product/service lines, you'll find out that they are all formidable in their own right. They are still billion dollar product lines!

Source: Apple 10-K FY12

As of 9/29/12, Apple had a total of 29 billion in cash and cash equivalents and short-term securities. That exceeds the market capitalization of Sprint at the current moment. But we all knew that. What you might not have already known is that Apple keeps its inventory levels low relative to the size of the company.

Inventories make up about 1% of total current assets and even less of total assets. What does this mean? Either Apple is very good at forecasting they inventory levels and/or there is still a huge demand for Apple products.

How does APPL look for the coming months? There will always be competition. However, there is no reason why a company cannot stand tall even in the face of competition. Take for example, Coca-Cola. Even with all the competition surrounding it, it still ranks as one of the top companies in its industry after many years. You say this industry is different? It is quickly changing, but so is APPL.

You may have been looking for a crystal ball, but when it comes down to it, fundamentally it looks sound, but technically it looks shaky at the moment. Bottom line is the obvious, which is we can only speculate what is truly behind this recent great move down.

Disclaimer: Article is written for informational purposes. It isn't intended as investment advice.
Disclosure: I have a position in AAPL.
 
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