The 2016 Bullish and Bearish Case for Apple

As 2015 has come to a close, 24/7 Wall St. is looking forward to see what the strategists and analysts on Wall Street expect for the stock market and the major stocks in 2016. It turns out the bull market was interrupted in 2015, as the Dow Jones Industrial Average closed out the year at 17,425.03, down 2.2%. That may be hardly a reason to call a bear market ahead, but investors know this was the first annual loss after six straight years of gains.

Apple Inc. (NASDAQ: AAPL) is the absolute largest company in the world, and by that token perhaps the most widely followed, with a market cap of $586.86 billion at the end of 2015. Despite its popularity, Apple stock posted lost on the year, for the first time since 2012, and then even before that in 2008.

While the index performance of the Dow does not account for individual stock dividends, Apple closed out 2015 at $105.26, for a total return of -3.01% if you account for its dividend payments.

For the year ahead, the consensus analyst price target for Apple from Thomson Reuters is $148.00. If the analysts are correct, the expected total return would be 42.6%, if you include its dividend yield of 2%. Does it seem right that a Dow stock, even the mighty Apple, can run that much? It depends, but that would make Apple the highest expected total return out of any Dow stock for the 2016 year by a huge margin.

Another consideration is that 2016 has gotten off to a very bumpy start. Apple shares were trading at just $102.00 on the third trading day of the year.

Apple was picked as one of the top end-of-year stocks by Goldman Sachs, despite a shaky 2015 performance. It is on the firm’s prized Conviction Buy list and was initially included on that list with a $163.00 price target — some $15.00 higher than the consensus analyst target now. That implies upside of over 50%. Keep in mind that many analysts have lowered expectations for Apple and are expected to keep doing so into 2016. The big issue was that Goldman Sachs is looking at Apple as a subscription model ahead, with massive recurring revenues, rather than just being a seller of the top tech gadgets.

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