Taking a Fourth Bite of This Tech Giant

This week’s Alpha Algorithm revisits a familiar tech name, Apple, Inc. (AAPL), for the fourth time.

Most recently, you sold out of Apple on Sept. 8 at $159.25 for a 10% gain. Although the stock pulled back sharply below $150 in the recent sell-off, Apple has remained as one of the very favorite stocks among the Alpha Algorithm strategies.

With the stock rebounding in the last two trading days, this is a low-risk time to get back into this company.

Apple, Inc. (AAPL) of Cupertino, California, designs, manufactures and markets mobile communication and media devices, personal computers and portable digital music players to consumers, small- and mid-sized businesses and enterprise and government customers worldwide. It is the largest company in the world based on market capitalization.

Apple (AAPL) versus the S&P 500 year to date

13 Top Investment Strategies Betting on Apple, Inc. (AAPL)

1. High-Quality Stock

The stock exhibits positive fundamentals, including high return on equity, stable year-over-year earnings growth and low financial leverage.

2. Fundamental Strength

This is a top U.S. stock based on fundamentals measured by book value, cash flow, sales and dividends.

3. Momentum Model

The stock is among the top approximately 100 U.S.-listed companies to demonstrate powerful strength characteristics relative to the 3,000 largest U.S.-listed companies.

4. Goldman Sachs’ Active Beta

The stock is selected according to four factors — value, quality, momentum and low volatility. These, in turn, are based on criteria including book value, sales and cash flow scaled by share price, profit/assets or return on equity (ROE), risk-adjusted returns and daily standard deviation of returns.

5. Small-Cap/Value Tilt

Selected using a multi-factor modeling approach, the stock is a smaller-cap or value stock designed to enhance portfolio risk/return characteristics.

6. Shareholder Yield

This is one of the companies on the U.S. stock market that is (a) paying cash dividends, (b) engaging in net share repurchases and (c) paying down balance sheet debt.

7. Large-Cap Momentum

The stock is part of a major hedge fund’s systematic strategy that invests in large- and mid-cap U.S. companies with positive momentum and that rank in the top third of total return over the prior 12 months, excluding the last month.

8. Hedge Fund Alpha

Based on publicly available disclosures, successful hedge fund managers are investing in the stock.

9. Insider Sentiment

It is one of 100 equally weighted U.S.-listed large- and mid-cap stocks chosen based on trading in company stock by corporate insiders, price momentum and trailing 12-month volatility. Specifically, it looks at the increase in insider holding.

10. Goldman Sachs Hedge Fund Index

The stock is part of the Goldman Sachs Hedge Industry Index, which tracks an equal-weighted index of the 50 most frequently held U.S. companies selected from the portfolios of hedge funds.

11. Billionaire Bet

The stock is one of 30 U.S. companies tracked in an equal-weighted index selected from the portfolios of 10 asset managers with a personal net worth of at least $1 billion.

12. Capital Strength

The stock is part of a strategy that seeks to outperform the market by selecting companies based on the strength of their balance sheets, long-term-debt ratios and return on assets (ROA).

13. Momentum Factor

The stock is one of the top 120 large- and mid-cap U.S. stocks exhibiting relatively higher price momentum, as measured by a specific factor which historically has driven a significant part of companies’ risk and return.

Recommendation

So buy Apple Inc. (AAPL) at market today and place your stop at $142.00.

If you want to play the options, I recommend the AAPL December $155 calls (AAPL171215C00155000), which last traded at $6.42 and expire on Dec. 15.

Portfolio Update

You were stopped out of Visa Inc. (V) at $103.80 for a 15.41% gain.

Sell half of your LRCX December 2017 $170 calls, which last traded at $16.20, for a 50% gain.

Sincerely,

Nicholas A. Vardy