Wall Street Strategies
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By Charles Payne, CEO & Principal Analyst

My watch list really does focus on watches- Apple (AAPL) Smartwatches.


Image result for dick tracy wrist radioI always talk about spotting trends and doing my homework to see if they could be worthwhile investments. The trend increasingly growing before our very eyes is the smartwatch. 

I admit I was skeptical when Apple introduced the Apple Watch in September 2014.  

Sure, there was this cool factor that had been around this kind of watch since Dick Tracy introduced his two-way radio watch in the 1946 comic series. Over the years, that gee-whiz factor faded.

The initial results for the iWatch also suggested it would be a nice novelty product, but it couldn’t generate the kind of revenues and profits for a behemoth like Apple to make up from stalling smartphone sales.

And that meant the smartwatch would never be a factor for investors. And that has certainly changed.

Everywhere I Look

My wife was an early fan of the Apple watch, but only recently have I noticed the growth of users. The watch is on the cusp of becoming ubiquitous. Two Saturdays ago, I was shopping for the grandchildren at Pottery Barn Kids and a salesperson recognized me from television. We had a great chat, and soon her co-workers joined the conversation.

The most expensive Apple Watch costs $114,995 and it has diamonds I noticed three of the four were wearing Apple watches. I asked about their watches and they gushed and told me about their daily rivals to take the most steps and to close the most circles.

The more they talked about their watches, the more it was clear these devices have become integral parts of their everyday lives. 

This past weekend, I saw more of the same; instead of New Jersey suburbanites, it was all the hip waiters at a couple of the Manhattan restaurants. 

The story was the same; they loved their watches. 

I continued to ask around and discussed that the band is the new status symbol, which probably was going to happen after the company Brikk sold two iced out versions in 2015 for $115,000 each. Now everyone is making bands, and the Gucci knock-off is very popular for those that can’t afford the real deal. 

The Apple Watch is going to be a monster seller this Christmas season, so let’s look at the stock.

Beyond Anecdotal

I had already suspected my early skepticism was misplaced after Apple’s financial release on July 30.  The news sent shares of the stock higher, even as smartphone sales came in less than expected.

The third-quarter 2019 (3Q19) Apple Revenue Results (three months ended June 30, 2019)

  • iPhone: $25.98 billion -11.8%
  • Mac: $5.82 billion +10.7%
  • iPad: $5.02 billion +8.4%
  • Wearables: $5.52 billion +48.-%
  • Services: $11.45 billion +12.6%

Apple proved it was more than a one-trick pony (although smartphone sales must rebound to help the stock) with its best June quarter ever and record revenues from services (which still missed Wall Street’s consensus). The numbers are looking great, and while there are unknowns, the watch story must be watched.

The result is earnings consensus have begun to soar, and that’s often a harbinger for the underlying share price.

Technical View

Apple stumbled around $212 twice, making that a potential buy trigger once it cleared in the future.   The other trend is higher lows, putting the chart in an ascending triangle formation. There will be a significant move coming soon.

Charles Payne
Wall Street Strategies


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