Apple (NASDAQ:AAPL) started 2019 at the 52-week low but erased half of the stock’s drop since then. The stock would have closed at $200 but markets headed south. Higher short-term rates relative to the 10-year and a lack of a U.S.-China trade deal delayed Apple’s run-up.
Fortunately, Apple’s low valuations of 16 times earnings, an iPad and iMac refresh, and more offerings from its services division suggest the stock has more upside.
At a $225 share price, AAPL stock is still at a sub-20 times P/E. In the next earnings report, strong iPhone sales and higher expectations for iPad sales could send the stock to that level.
iPad Refresh
Apple refreshed its iPad Air with an A12 processor. The Retina display and support for both the Pencil and Smart Keyboard now makes an iPad upgrade compelling. Still, consumers may already have a large-format iPhone that is big enough. That would negate the need for an iPad.
Apple finally updated the iPad Mini, also with an A12 processor. The refresh is years overdue and the 7.9-inch format may resonate well with consumers. The market does not have any good tablet options at that size. Samsung has an expensive option in both the small and 10-inch format.
Takeaway
Improved iPhone sales are the near-term catalyst for the stock. A rebound in tablet sales is a secondary catalyst.
