Today’s social media frenzy surrounding the news that Carl Icahn has taken a large stake in Apple Inc.
(NASDAQ:AAPL) led to a swift 5% jump in share price for the world’s largest technology maker. This move underscores the tremendous influence that both social media and world-famous investors have over the financial markets. Not surprisingly, ETFs that are heavily weighted in Apple stock -- such as the Technology Select Sector SPDR
(NYSEARCA:XLK), PowerShares QQQ
(NASDAQ:QQQ), and iShares US Technology ETF
(NYSEARCA:IYW) -- also rallied to new multi-year highs.
Since the June intraday low of $388, Apple stock has now been lifted over $100 per share, which represents a nearly 26% increase in value. The catalyst for this rise has been on the back of better-than-expected quarterly earnings combined with the expectations for enhanced products in the pipeline. Speculation over the launch of new devices such as the iWatch combined with retooling its existing iPhone lineup to include a lower cost option have served to increase investor demand for one of the most innovative companies in America. Many of these new product announcements are expected as early as next month, which could stimulate Apple’s stock price even further.
One of the reasons that I like Apple moving forward is that it is not only an excellent growth story, but also a strong income play as well. Apple has told shareholders that it will use its cash on hand to increase share buybacks as well as distribute reserves in the form of ongoing quarterly dividends. This strategy will ultimately open the doors to a wider subset of investors who are looking to enhance their portfolios with a technology dividend value opportunity.
Even with today’s move, Apple’s share price is still 30% below its all-time high of $705. From a value standpoint, this may be an excellent opportunity to own a company with a stellar track record of product success. However, from a pure trading perspective, I must caution that there is a very real risk of a broader market correction that could drag Apple down with it. No matter how you play the stock, consider using a trailing stop loss to define your risk.
Read more from David Fabian, Managing Partner at Fabian Capital Management:
How to Boost Your Yield With Tech Stocks
Treasury Bonds: New Lows, Now What?
Dissecting The Irrational Enthusiasm for Stocks