It’s a royal battle between the two largest S&P 500 stocks.
In one corner of the ring, Microsoft stops hitting records; in the second, Apple has not reached a new high since January.
CNBC’s “trading nation” asked two traders what is the best choice: champion Microsoft or the recent underdog Apple?
“It depends on what you value more. Do you value … catching up, or do you value long-term growth?”
Apple’s comeback from the downturn in the pandemic has slowed since January. While it was 100% higher than a 52-week low, it has fallen 10% from its January 25 high. Shares have fallen nearly 2% this year, although the XLK tech ETF has gained 8%.
“Whether you just look at pure valuation, believe it or not, Microsoft is not actually trading at as high a premium as Apple is, so even though Apple is definitely cheaper, Microsoft is actually cheaper compared to its own history,” she said.
Sanchez said Microsoft is trading about 20% above its long-term valuations, high but justified given its outlook for its sales growth trends.
JC O’Hara, marketing voice technician at MKM Partners, said Microsoft seems to be the strongest competitor here. However, that is not the name he is betting on.
“When you look at Apple and you look at Microsoft, they both deal with such a high degree of positive correlation between their price action. So what makes me think here is that Apple could be the best deal to buy right now. , “O” Hara said during the same interview.
Just as Microsoft last week began to break out to new heights, O’Hara predicts that Apple will do the same soon.
“If Apple starts building momentum and breaking new heights, many more eyes will look at this stock, so we are not buying leadership, we are buying one backwards, we are buying something that is slowly starting to get better,” he said.
Disclosure: Lido owns MSFT and AAPL. Sanchez has MSFT.