5 reasons to buy Apple right now: Analyst

Published Tue, Aug 25 201511:03 AM EDTUpdated Tue, Aug 25 20153:00 PM EDT

Maynard Um of Wells Fargo upgraded Apple to "outperform" Tuesday morning in a note sent to clients. He is one of the top analysts on Wall Street covering technology hardware. Um's picks average a 10.5 percent one-year return and is he ranked in the top 10 percent of all analysts, according to TipRanks.com. Um gave five key reasons why the company's stock will rise. Here is why he likes Apple now… 1) China less of an issue given CEO's comments: "While the economic slowdown in China and Apple's exposure to the region are likely the cause of the recent pullback in the company's stock, we believe Apple's September quarter may be fine. CEO Tim Cook commented in an email to CNBC's Jim Cramer that its sales in China for July and August "continued to experience strong growth" and iPhone activations "accelerated over the past few weeks." 2) Negative sentiment already priced in: "We believe investors are likely concerned about the December quarter guidance, but we believe the investor sentiment likely already embeds some amount of slowing. We are expecting December quarter iPhone units to be down slightly year over year on a tough comparison to last year." Read More Apple's Cook on China to Cramer: Seeing strong growth in China 3) U.S. wireless carrier programs could be helpful: "We believe recent U.S. carrier networks move away from two-year subsidized wireless plan agreements to installment and lease structured plans is a slight positive for AAPL. The change will allow subscribers to upgrade to a new smartphone at a faster rate which should benefit iPhone units versus past years when subscribers typically waited to the two-year cycle before upgrading." 4) New product introduction catalysts later this year: "Apple is expected to launch numerous products in second half including the iPhone on its purported Sept. 9 event. Furthermore, iPads are typically refreshed in October with recent reports on DigiTimes suggesting a 12.9-inch iPad Pro launch as well." 5) Strong capital return and cost-cutting potential: "Overall, we believe domestic cash generation and potential additional debt raise should help the company execute on its capital return commitments. ... We note that the company has not had a major cost reduction effort in several years and while some increase in operating expense is understandable given the company's efforts in new product categories, we believe Apple, if it needed, could pull several levers to control its costs." Given the reasons above, Um believes the risk-reward after Apple's decline of 22 percent since mid-July is attractive. Read More Can David Einhorn turn 2015 around? He raised his Apple 12-month price target from $125 to $135 based on a 10 times 2016 free cash flow multiple, which would be 31 percent total return from Monday's close.

Apple Store employees fill orders for iPhones in Palo Alto, California.

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Maynard Um of Wells Fargo upgraded Apple to "outperform" Tuesday morning in a note sent to clients.

He is one of the top analysts on Wall Street covering technology hardware. Um's picks average a 10.5 percent one-year return and is he ranked in the top 10 percent of all analysts, according to TipRanks.com.

Um gave five key reasons why the company's stock will rise.

Here is why he likes Apple now…