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Apple's Earnings: Should You Take Some Profits Off The Table?

Apple's Earnings: Should You Take Some Profits Off the Table? Good day, dear readers! Let's take a stroll down Wall Street, as we take a closer look at one of its superstars, Apple Inc. AAPL Over the past year, Apple's stock has turned quite a few heads with a stellar 50% rise. But as we approach the company's Q3 earnings release on August 3rd, 2023, we're adopting a slightly more cautious stance.

Why, you may ask? Well, for starters, Apple's AAPL financial performance has been showing signs of fatigue lately. Key metrics such as revenue, net income, and net profit margin have all been on a downward slope in recent quarters. Moreover, we've observed a historical tendency for Apple's AAPL stock to slump during the months of August and September shown in the Apple AAPL stock chart below.

Given these factors, we're advising our premium subscribers that it might be wise to book some profits at this point. Our premium clients have been buyers since February 6th, 2023. Is this a bearish call on Apple? Not at all. We remain bullish about Apple's long-term prospects. However, in the short term, we believe prudence is a virtue. Let's dive deeper to understand why.


Despite the recent underperformance, why might some investors still want to hold on to Apple AAPL stock besides being the largest well know company in our lifetimes? First, a bright spot comes from Apple's booming Services segment. In its most recent earnings call, Apple noted that Services grew 33% YoY, and its monthly active users reached an all-time high. Moreover, Apple's new product line-up and upcoming launches could present a significant opportunity for growth. Apple AAPL has released new products such as Airpod Max, updated its iPad, and iPhone, and is expected to launch Apple Glass, a new watch, a wireless charging pad, and much more in the coming months.


The question remains: should you sell some Apple shares before the upcoming earnings? Even with Apple's AAPL growth potential, Apple stock's current valuation might be too high; after all, a P/E ratio of 20x is much higher than Apple's five-year average P/E ratio of 17x. Also, as mentioned earlier, Apple's AAPL earnings and revenue have recently missed consensus estimates, which might hint at an incoming decline in stock value. It's worth noting that our premium subscribers have received a sell alert on their Apple positions to book some profits and de-risk their portfolio. Our analysts believe that the risk/reward of maintaining full exposure to Apple AAPL stock right now might not be worth it, given the many uncertainties moving forward.


Conclusion:

With all this information in hand, this seems like the right time for investors to take some chips off the table and book some profits. Apple is undoubtedly a greatest company in our lifetimes with a lot of growth potential still in it's future, but with a looming earnings call, uncertainty remains. With all said and done, the wisest course of action would be to de-risk your portfolio and wait for a more opportune time to buy Apple shares.

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Apple Stock Chart
Apple Stock Chart

Apple Stock Chart
Apple Stock Chart



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