With approximately 10.7 million users, subreddit r/wallstreetbets entered the mainstream following an epic GameStop (GME) short squeeze earlier this year. The forum has triggered red-hot price rallies in several stocks this year, including…
Apple Inc. (AAPL – Get Rating), Microsoft Corporation (MSFT – Get Rating), AMC Entertainment Holdings, Inc. (AMC – Get Rating), and Clover Health Investments Corp. (CLOV – Get Rating). These names are still among the top ten most discussed stocks on the forum. However, while the AMC and CLOV rallies were essentially a consequence of a short squeeze, that isn’t the case with the other two stocks.
Tech stocks have gained significant momentum amid the COVID-19 pandemic. Furthermore, with robust digitization occurring in almost every industry, and with 5G being deployed widely, tech companies are seeing a surging demand for their products and services. So, considering the tech sector’s solid growth attributes, we think AAPL and MSFT could be great picks now.
In contrast, the social-media-triggered interest of retail investors, and the excessively stretched valuations of AMC and CLOV, could potentially lead to these shares retreating in price in the near term. Given their shaky fundamentals amid heightened market volatility, we think AMC and CLOV are best avoided now.
Stocks to Buy:
APPL is one of the largest manufacturers and suppliers of consumer electronics. Its market dominance in the tech world is unparalleled. Also, the company’s innovative edge and brand value have allowed it to enjoy strong growth over many years.
Last month, AAPL announced that GarageBand for iOS and iPadOS now includes all-new Sound Packs from some of today’s greatest artists and producers, allowing consumers to unleash even more musical creativity. In addition, for the first time, users can learn how to remix directly inside the app with all-new Remix Sessions. This development could contribute to the company’s leadership position by enhancing its brand value.
Also in June, AAPL launched Apple Podcasts Subscriptions, a global marketplace for premium podcast subscriptions. Listeners in more than 170 countries and regions can now purchase subscriptions for individual shows and groups of shows directly on Apple Podcasts. These new features could help the company boost its revenue and drive its business growth.
AAPL’s net sales increased 36.5% year-over-year to $81.43 billion in the third quarter, ended July 26, 2021. Its operating income grew 84.3% from its year-ago value to $24.13 billion, while its net income improved 93.2% year-over-year to $21.74 billion over this period. The company’s EPS has increased 100% from its year-ago value to $1.30.
A $5.58 consensus EPS estimate for the current year represents a 70.1% improvement year-over-year. Furthermore, AAPL has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Analysts expect AAPL’s revenue to increase 33.4% year-over-year to $366.12 billion in its fiscal year 2021. The stock has gained 18.9% over the past year and 27.9% over the past nine months.
AAPL’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
AAPL has been rated a B for Sentiment and Quality. Within the B-rated Technology-Hardware industry, it is ranked #20 of 45 stocks.
To see additional POWR Ratings for Growth, Value, Stability, and Momentum for AAPL, click here.
MSFT develops and supports software, services, devices, and solutions worldwide. It operates through Productivity and Business processes; Intelligent Cloud; and More Personal Computing. The company sells its products through OEMs, distributors, and resellers and directly through digital marketplaces, online stores, and retail stores.
Last month, MSFT introduced…
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