FSR continues to regard AAPL as undervalued based on its strong fundamentals. We reiterate our BUY rating and fair price of $600.
Question for you: At what price would you consider changing your mind on your analysis? Is there a stop loss price? As I see your chart, it would seem as though $390 might be a place where you would consider selling but given the fundamental bullishness. Just curious. Thanks in advance.
Hi Tim. Good question. We use P&F charts to see who is in control bulls or bears. We use charting to confirm our recommendations which are really based on fundamental (valuation) driven analysis. With AAPL we see a significant margin of safety based on the distance of our fair value calculation and the current stock price. It would take a substantial slow down in growth (12%), cost of capital (8.68%) or equity risk premium (est 5.73%) for us to change our mind. However investors concerned with short-term risk (volatility) could use a trailing stop loss at 20% below current values. Hope that helps!