Apple: Boring Might Be Just What You Need

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 |  About: Apple Inc. (AAPL), Includes: BBRY, DELL, HPQ, NOK
by: Stephen Rosenman

I didn't think my short suggestions -- Dell (NASDAQ:DELL), HP (NYSE:HPQ), Nokia (NYSE:NOK), and RIM (RIMM) -- would work out quite so well. The four tattered techs got pummeled by the market. My call on Apple (NASDAQ:AAPL) played out equally well. I suggested buying Apple on May 18 at $530 accurately hitting the bottom in the stock, noting that the technicals were flashing a clear buy signal.

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My forecast for Apple's next two months: a trading range between $530 and $590.

The reasons:

  1. Apple typically enters a 4 to 6 month trading range each year, usually after a strong run-up. We're in week 8.

  2. Lack of news to move the stock higher. The company has been unusually quiet: This is the first time in 12 years Apple hasn't issued a press release in over 5 weeks. Check out Apple's list of announcements: May is blank. It does appear CEO Tim Cook is "doubling down on secrecy."

  3. No credible reports of upcoming products. Lots of rumors but nothing worth buying on. Apple launched the 4S in October, the new iPad in March. It would be uncharacteristic of Apple to refresh its two main products this soon. Don't expect a new iPhone until September earliest.

  4. Less enthusiastic analysts. Analysts have only raised current estimates a tiny 5 cents over the last 30 days. They've actually lowered next quarter estimates by 4 cents.

  5. A strong floor underneath the stock with a low PE valuation, 0.5 PEG, and an immense cash position.

In this treacherous market, a stock that can move sideways isn't bad. Boring might just be what the market needs. Apple is biding its time until August.

Disclosure: I am long AAPL.

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