Image via CrunchBase
Apple’s (NASDAQ:AAPL) stock was on a big rebound on Monday. In early afternoon trading, Apple was near the $563 mark, close to the high for the day. This means that the stock is up nearly 6 percent for the day, and close to 10 percent above the Friday’s low, but long way from its all-time highs of $705.
What drives this big rebound?
Once again, there were no major corporate developments to account for such rebound, other than rumors that Mac OS X may be named “Lynx,” according to AppleScoop. But I cannot see how such a name change will have any material impact on the company’s performance and the value of the stock.
Here are three plausible explanations:
First, a positive overall market sentiment fueled by strong housing numbers this morning, and calming statements by President Barack Obama, Treasury Secretary Tim Geithner, and House Speaker John Boehner on the fiscal cliff over the weekend.
Second, a following through from Friday’s technical bounce-back, which is usually ignites short-covering, though Apple doesn’t have a very large short interest.
Third, a cover story in Barron’s over the weekend, which concludes that Apple is a better buy than Samsung Electronics. “But while Samsung may be the underdog, Apple is the more underappreciated stock. That gives Apple the edge in a bout between these two heavyweights—a winner not by knockout, but by decision.”
Apple is further underappreciated when it is compared with another competitor in the smartphone and the tablet market, Google (NASDAQ:GOOG). Apple trades at a forward (Sept 2014) PE of 9.06, while Google’s at forward PE of 13.96 (Dec 31, 2013).
Also read:
Disclosure: Long on AAPL
