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Can Holiday Sales Rally Apple's Shares?

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Apple’s stock rebounded on Friday, November 16, from an intra-day low of $506 to close at $566 on Monday, November 19.  It closed at $572 on Friday, November 23, the day after Thanksgiving.  The iPhone 5 availability has improved just in time for the holiday selling season with the iPhone becoming largely available at the major carriers (AT&T, Sprint and Verizon) over the past week and Apple and Best Buy stores have been receiving larger shipments recently.

With the iPhone 5, updated iPad and the iPad mini Apple should experience a very strong December quarter.  I am projecting December quarter revenue of $55 billion (vs. guidance of $52 billion) an increase of 19% year over year and 53% quarter over quarter driven by 50 million iPhones generating over $31 billion or 57% of total revenue.

I expect that a good number of sell-side analysts will be publishing positive notes on Monday regarding crowds at Apple stores and very strong sales from Black Friday and Thanksgiving weekend.  These articles could further help change the psychology on the shares from the negative sentiment that it has experienced since its all-time high of $702 on September 19, the day that the iPhone 5 first became available.

While the stock could continue its roller coaster ride given the concerns of iPhone supply, gross margins and tax gain selling to capture a lower capital gain tax rate before year end I believe that the shares will rebound when investors focus on holiday sales.

One major caveat is that one shouldn’t invest based on past stock patterns.  While a pattern could repeat itself, understanding the fundamentals is more important.

Below is a table of Apple’s stock price starting with the Monday before Thanksgiving to January 31st of the following year for the past five years.

Monday

Wednesday

Friday

Monday

Day before

Day After

Year

prior Thanks

prior Thanks

After Thanks

After Thanks

Christmas

Christmas

Dec. 31

Jan. 31

2012

$565.73

$561.70

$571.55

2011

$369.01

$366.99

$363.57

$376.12

$403.33

$406.53

$405.00

$456.48

2010

$313.36

$314.80

$315.00

$316.87

$323.60

$324.68

$322.56

$339.32

2009

$205.88

$204.19

$200.59

$199.91

$209.04

$211.61

$210.73

$192.06

2008

$92.95

$95.00

$92.67

$88.93

$85.04

$85.81

$85.35

$90.13

2007

$163.95

$168.46

$171.54

$172.54

$198.80

$198.95

$198.08

$135.36

The following table shows how the stock performed from the Monday prior to Thanksgiving through January 31st of the following year.  It shows that on average the shares don’t move much from the Monday before Thanksgiving to the Monday after.

However, the shares have performed well by the end of the year and January 31st of the following year.  On average over the past three years the shares have increased from 4.7% to 8.4% since the Monday before Thanksgiving.

Monday

Wednesday

Friday

Monday

Day before

Day After

Year

prior Thanks

prior Thanks

After Thanks

After Thanks

Christmas

Christmas

Dec. 31

Jan. 31

2012

(0.7)%

1.0%

2011

(0.5)%

(1.5)%

1.9%

9.3%

10.2%

9.8%

23.7%

2010

0.5%

0.5%

1.1%

3.3%

3.6%

2.9%

8.3%

2009

(0.8)%

(2.6)%

(2.9)%

1.5%

2.8%

2.4%

(6.7)%

2008

2.2%

(0.3)%

(4.3)%

(8.5)%

(7.7)%

(8.2)%

(3.0)%

2007

2.8%

4.6%

5.2%

21.3%

21.3%

20.8%

(17.4)%

Avg. 2007-11

0.8%

0.2%

0.2%

5.4%

6.0%

5.5%

1.0%

Avg. 2008-11

0.3%

(1.0)%

(1.0)%

1.4%

2.2%

1.7%

5.6%

Avg. 2009-11

(0.3)%

(1.2)%

0.0%

4.7%

5.5%

5.0%

8.4%

It appears that most of the gains during the holiday season are from the Monday after Thanksgiving through January 31st of the following year.  On average over the past three years the shares have increased from 4.6% to 8.2% since the Monday after Thanksgiving.

Monday

Wednesday

Friday

Monday

Day before

Day After

Year

prior Thanks

prior Thanks

After Thanks

After Thanks

Christmas

Christmas

Dec. 31

Jan. 31

2012

2011

7.2%

8.1%

7.7%

21.4%

2010

2.1%

2.5%

1.8%

7.1%

2009

4.6%

5.9%

5.4%

(3.9)%

2008

(4.4)%

(3.5)%

(4.0)%

1.3%

2007

15.2%

15.3%

14.8%

(21.5)%

Avg. 2007-11

5.0%

5.6%

5.1%

0.9%

Avg. 2008-11

2.4%

3.2%

2.7%

6.5%

Avg. 2009-11

4.6%

5.5%

5.0%

8.2%

Disclosure: My family and I own Apple stock.