10/25/13

1) A study out of Citigroup’s quantitative research group showed one of the best predictors of an earnings beat is a stock’s prior one-month performance going into the earnings report. Apple is up more than 10% over the past month, versus a 3.5% move in the S&P 500.

2) Technically, Apple has just broken out of an intraday bullish flag pattern. And it’s just broken the neckline of a bullish inverse head and shoulders pattern projecting a near term price target for Apple of $570. That out-performance indicates smart money is jumping into this stock before Apple reports earnings on Monday.

3) Analysts have raised their target price over the past week on Apple. Ed Parker with Lazard Capital raised his price target to $570 and reiterated a buy rating on Apple. Cantor Fitzgerald’s Brian White upped his Apple price target to $577 and believes the stock could surprise on the upside. And Goldman Sachs’s Bill Shope reiterated a Buy rating on the stockand a $560 price target last week. These analyst moves are usually a good predictor of a stock set to beat earnings expectations.

4) Apple now has a billionaire activist, Carl Icahn, who is hell-bent on forcing the company to deploy its cash to buy a huge chunk of stock back. Don’t be surprised if Apple on Monday announces another huge stock buyback or increase in its dividend payout.

5) Apple finally has price momentum and product momentum. After Apple’s Media day this week, people were excited for the first time in over a year about Apple’s new products, especially their new more powerful mini iPad. All of this shows that Apple is getting its buzz back. And this means the company will probably forecast better sales and earnings in 2014.
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Will Meade
President of The Billionaires Portfolio
Providing Sophisticated Hedge Fund Strategies and Analysis For The Everyday Investor