A gain of 51.34% in 2019 for shares of Apple Inc. (AAPL) tells a story of big buy demand for the shares. This is happening to one of the largest companies in the world. This buying is very unusual and has been very consistent in 2019. A great way to uncover tomorrow's winners is to look for great stocks seeing big buy activity, and Apple stock could be setting up for even more gains.
Smart money managers are always looking to bet on the next outlier stocks … the best in class. For Mapsignals, it's not enough to look at technicals and fundamentals alone. The key lies in the demand for shares … the big money.
I'll go into the fundamental picture later, but the true tell on the near-term trajectory of a stock lies in its trading activity. Simply put, it's all about supply and demand. When demand is higher than supply, the stock rises. When demand is lower than supply, stocks fall. For 2019, Apple has seen relentless demand, causing the massive stock to gain more than 50%.
For Mapsignals, when we look for an entry on a leading stock, we look for big money signals. Just to show you what our big money activity signals look like, have a look at all of the big money (unusual institutional) signals Apple stock has made over the past year. Focusing on 2019, you can see a lot of buy signals (green) that line up with a lift in the shares. These signals are rare, but when they come in clusters like below, you often see a rapid move in the stock price:
In 2019, Apple has logged 16 big money buy signals, indicative of buying in the shares (see chart above). This shows that a lot of demand can reward shareholders. It's been happening quite a bit recently. These data points suggest that big money appetite for the stock is high.
If you are going to make a bet on the direction of a stock, it is prudent to pay attention to how the shares are trading. Based on history, the odds suggest that this stock is poised for gains. The big money is always looking for an opportunity to buy shares on the cheap. It's all about playing the odds by not fighting the trend.
Mapsignals' goal is to identify tomorrow's top stocks today. We're basically looking for outlier companies with healthy fundamentals accompanied by big money signals (outsized institutional activity). We are looking for the big money bets because big money moves stocks. By studying these data points, we can make an educated guess as to which stocks institutions are trafficking in and marry this information with fundamentally sound companies. We want the odds on our side when looking for the highest-quality stocks.
When we decide on a long candidate, we consider leaders that have a history of technical outperformance. When they show leadership, we see these as opportunities. Below are a few areas in which Apple stock has grabbed our attention year to date (YTD):
- YTD outperformance vs. market: +31.27% vs. SPDR S&P 500 ETF (SPY)
- YTD outperformance vs. technology ETF: +18.51% vs. Technology Select Sector SPDR Fund (XLK)
- Recent big money buy signals
Now, we take it a step further and score the best stocks showing big money trading activity. Below you can see the historical times since 2014 when Apple made buy signals for Mapsignals. These are the highest-rated signals in our stock universe. What jumps out in the below chart is how the stock steadily lifts year after year alongside monster demand:
On top of a long-term technical picture that is strong, one should also look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Apple's numbers are very strong:
- Three-year revenue growth: +5.2%
- Three-year earnings growth: +10.18%
Apple shares are breaking out with big volumes. The company is growing at a great rate considering its size. We like the long-term story of the stock. The narrative for Apple and other high-quality technology stocks is one of growth in the years ahead.
We are always on the lookout for great companies pressing higher year after year. The best companies in a group tend to outperform over the long run. Technology stocks have been one of the strongest groups in recent years. All of this points to a long-term opportunity for the stock.
The Bottom Line
Apple stock is breaking out with buying pressure. Our big money indicator is signaling that we should take notice. Shares could be positioned for more upside. Given the historical growth in share price and growing fundamentals, this stock could be worth a spot in a growth-oriented portfolio.
Disclosure: The author holds no position in Apple shares at the time of publication.