"First and foremost, investors should anticipate a cooling-off period for AAPL stock. Take a glance at the long-term price chart and you'll notice an identifiable growth pattern. Impressively, Apple stock has doubled during the past five years. It wasn't a straight, uninterrupted path higher, however. The general pattern is a choppy sideways period followed by an eventual rally. Since AAPL stock recently had a powerful rally from $170 to $270, long-term shareholders should understand that a sideways consolidation period is to be expected. Again, you can't rush the process; you just have to let it play out."
"Furthermore, after the aforementioned stock-price rally, Apple's valuation needs to cool off. Notably, Apple's trailing 12-month (TTM) price-to-earnings (P/E) ratio of 34.14x is above the sector median P/E ratio of 23.99x. More alarmingly, Apple's TTM price-to-sales (P/S) ratio is 9.21x. That's quite elevated when compared to the sector median P/S ratio of 3.43x. Hence, value-focused investors may have to wait a while before a sensible, sustainable stock-price move can occur."
Apple's market capitalization approaches $4 trillion while many investors seek a share-price breakout above $300. A breakout cannot be forced, and investors should avoid overconcentrating positions. Historical price action shows a pattern of choppy sideways periods followed by rallies; the stock doubled over five years with a recent rally from $170 to $270, so a sideways consolidation and valuation cooling are likely. Apple's trailing 12-month P/E of 34.14x exceeds the sector median of 23.99x, and its TTM P/S of 9.21x far surpasses the sector median of 3.43x. Value-focused investors may need patience.
Read at 24/7 Wall St.
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