A gain of approximately 26.27% in 2018 for shares of Apple Inc. (AAPL) likely couldn't have happened without strong institutional buying accompanying the move. Apple is executing at an extremely high level for a company of this size. It released earnings on July 31 with strong numbers that the Street liked. The company is firing on all cylinders and even has the backing of arguably the greatest investor of our lifetime, Warren Buffett.
Even with terrific fundamentals, the true tell on the near-term trajectory of the stock lies in the trading activity. At many points in 2018, Apple shares have increased in price alongside an increase in volume. This can be indicative of smart money accumulating shares. The bottom line here is that the manner in which a stock trades can oftentimes alert you to the forward fundamental picture more so than simply looking at a company's financials alone.
In the view of Macro Analytics for Professionals (MAP), the strongest indicator of positive price momentum is obtained by measuring potential institutional accumulation. In 2018, Apple has logged 11 of these rare signals. We like to see bullish activity in the shares alongside solid forward fundamentals. This indicates that, over time, demand for the stock should increase. (See also: Apple's Stock Has Double-Digit Upside: BofA Merrill Lynch.)
In the chart below, Apple stock broke out to new 52-week highs on big volumes. Shares should continue the upward trajectory:
MAP's process focuses on identifying companies with healthy fundamentals accompanied by outsized, unusual institutional activity to try and measure potential accumulation/distribution at the single-stock level. By studying these data points, we can hypothesize which equities 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 deciding on the strongest candidate for long-term growth, we consider many technical areas important to success. A few of these factors for Apple are as follows:
On top of a great technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Apple has solid sales and earnings growth rates:
Apple checks the box on strong technicals and fundamentals, while showing bullish institutional momentum in 2018. We believe that the current level for the shares is in position for further upside. All of this points to further long-term bullish action for the stock.
The Bottom Line
Apple represents a potential buying opportunity for the long-term investor. Given the solid earnings growth, revenue growth and multiple unusual accumulation signals, this stock could be worth a spot in a growth-oriented portfolio. (For additional reading, check out: Apple Should Buy Tesla: Ross Gerber.)
To learn more about MAP's institutional signals, please visit our "About Us" page.
Disclosure: The author holds no position in Apple shares at the time of publication.