2021 is not a good start for the Dow Jones Industrial Average (DJINDICES: ^ DJI) or the broader stock market, with the Dow up 1.7% at 13:20 EST Monday. Since the bank accounts of Americans are monitored by the stimulus and the wide availability of COVID-19 vaccines is only a few months away, there are many reasons to be optimistic. However, the valuations are historically high, and the talk of a stock market bubble could weigh on investors’ attention.
Shares of appeal (NASDAQ: AAPL) and Coca-Cola (NYSE: KO) was lower Monday to lead the Dow lower. Apple shares sank despite calls on the technology giant to outperform other FAANG shares this year, and Coca-Cola shares fell after being downgraded due to valuation issues.
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Apple could lead FAANG shares this year
Loup Ventures expects Apple to sell all other FAANG shares in 2021. The stock rose about 80% last year, pushing the technology capitalization of the technology giant more than $ 2 billion dollars. It could be another big year for Apple investors if Loup’s forecast hits the mark.
Loup based his view on a few factors. Increased work and learning from home is expected to continue to increase sales of Apple’s Macs and iPad tablets. Together, the products make up about a quarter of total revenue, and Loup expects it to grow by a double-digit percentage in 2021 and 2022.
Loup also expects demand for 5G smartphones to help Apple’s iPhone sales in the second half of the year. This would result in a multi-year upgrade cycle, Loup reckons. In the longer term, Loup expects Apple to offer subscribers that include hardware and services, and that a potential Apple Car will drastically expand the company’s total accountable market.
Loup expects Apple to grow its revenue by about 15% this year, followed by about 10% growth in 2022. This will be impressive given Apple’s size and the maturity of the smartphone market. Whether consumers accept 5G enough to increase significantly higher iPhone sales is an open question. How the US and world economy get out of it is also a big map for the technology giant.
Although Apple’s share may finally perform better this year, the first trading day in 2021 was still not good. Apple shares fell 3% early Monday afternoon amid a broad sell-off.
Analyst loses optimism for Coca-Cola
While Apple received positive reviews about analysts starting the week, liquor giant Coca-Cola was not so happy. RBC Capital Market analysts downgraded Coca-Cola shares to a ‘sector performance’ on Monday due to concern valuations.
Coca-Cola had a hard time during the pandemic, while visits to restaurants plunged. However, the stock has recovered much of the land it lost after peaking before the pandemic. RBC is of the opinion that the management of Coca-Cola makes good decisions, but that the company has no control over how business will develop in the short term. RBC argues that Coca-Cola is fully appreciated, that upward changes to the EPS estimate are unlikely and that the negative consequences of the pandemic will harm the business longer than many expect.
Failing restaurants and a movie business in turmoil could erode Coca-Cola’s out-of-home sales for some time. Fewer visits to stores can also sting, which reduces the momentum of Coca-Cola’s products. The company has lowered underperforming brands to refocus on its core portfolio, which could increase profitability in a tough environment.
Shares of Coca-Cola fell by about 4.6% early Monday afternoon as the downgrade of the analyst business worsened on the weak day for the market. Coca-Cola lost about 1% of its value last year; it has already surpassed the decline for 2021.