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How to Trade Apple

|Includes: Apple Inc. (AAPL)

As the world economy recovers, Apple will continue back up to its January 2008 levels of over $200 a share. As technology was one of the quickest sectors to decline during the advent of the recession, it has also proved to be one of the fastest sectors to recover.

The more the economy recovers, the more likely people will be to trade up to more expensive apple products. The thought is that people purchased much more affordable computers as the recession loomed. Now that the economy has bottomed, consumers will begin trading up to Apple products. This will make it easier for Apple to continue to grow market share, as industry analysts at NPD recently reported that 91% of all computer sold for over $1000 were Macs. While this number may not be spot on, it at least shows advantage Apple gains as the economy recovers.

New Ipods- September 9, 2009
Resellers of ipods are reporting low inventories of the entire ipod line up indicating a refresh of all ipods in the lineup. Apple has now confirmed its annual ipod event to occur on September 9th, 2009 at the Yerba Buena Center of the Arts in San Francisco. Many of the ipods will have cameras similar to those on the iphone. The Beatles are also rumored to make their way onto the itunes music store following this event.

6 inch or 15 inch Tablets?

It has been reported by the Wall Street Journal that this new Tablet launch has been the main focus of CEO, Steve Jobs since he returned to Apple from his hiatus in June. While speculations of screen sizes for the tablet range from 6 inches all the way to 15inches, it is clear Apple is entering this market which will surely add growth opportunity to the company. It will give Apple a new offering in the much more popular sub $1000 computer market. 

How to trade Apple

Based on past product releases from Apple, it seems that no matter what, the stock will drop on the day of the announcements. The anticipation of the new product releases always seems to outweigh the correction the announcements make in the fundamental valuation of the company. The best way to trade this that I can see would be to simply buy Apple now and sell it September 8th. It most likely will drop September 9th allowing you to buy it back sometime September 10th. I would then ride it up to $200 a share. After this, I would sell as Apple would stop relying on both growth and recovery and would only have market growth to fuel stock gains. I would then move the gains into other companies still recovering.

Disclosure: No Positions