AAPL Might Be Worth A Shot Here

26 Eki 2020

For this, I would simply like to quote something I read recently put out by Elazar Advisors, LLC. They recently put out a report talking about how AAPL is one of TER (Teradyne)'s biggest customers. They had the following analysis, which I think is great:

"Teradyne produces automatic test equipment. These are machines used to perform automatic tests on equipment like phones during the production process. Apple is one of Teradyne’s largest customers, so their comments on demand are important and can give us hints ahead of Apple's report.

Here’s what Teradyne said in the release:

'Entering Q4, market conditions in our test businesses are stronger than expected and we’ve positioned our production capacity to respond to potential short lead time demands as we move through the quarter..'

Shorter lead times aren’t typically a good sign. It means a company doesn’t have as much visibility. But here for Apple, shorter lead times seems like a fast catch up in orders trying to catch demand. The combination of the company saying short lead times associated with stronger demand aligns with Apple a) being late, but b) being in their prime time chasing business.

This is what Teraydne said on their earnings call:

“Within smartphones, the mid to high tier is the place to be in test and that's where Teradyne is solidly positioned. These phones are seeing disproportionate growth and complexity related to multiple high density camera arrays and the associated processing power and storage to manage this data.”

Apple sound like they are playing catch up to demand."

This to me means that we will likely see a huge guidance boost from AAPL's earnings call, which should serve to propel the stock higher. While I think this stock is already massively overbought relative to its growth and fundamental positioning (saturated TAM, peak margin, etc), I think the market likes the stock and right now there still isn't really any reason to argue.

I'll be buying calls in a RESPONSIBLY SIZED position going into this earnings report. I know it's a gamble, but every now and again I like to have some fun.

Cheers!