Apple will ‘underperform perpetually,’ trader warns

Apple shares are a poor investment choice right now, according to Steve Grasso, director of institutional sales at Stuart Frankel.

"I think it's going to underperform perpetually," Grasso said.

Apple shares have had a mediocre year, but rebounded nicely following an impressive earnings report. In fact, the stock is the Dow Jones industrial average's best performer over the past month, rising almost 12 percent.

Yet for Grasso, the company's reliance on the iPhone is problematic. When Apple reported earnings in late July, it exceeded analysts' expectations in part because of the success of the iPhone SE model. But there remains a concern among analysts that not as many people as expected will upgrade to the iPhone 7.

"Right now everyone is looking forward to the iPhone 7. ... I think it can only disappoint," Grasso said Tuesday on CNBC's "Trading Nation."

Grasso added that he would be a seller of any short-term strength in Apple stock.

"If you're looking for growth, you go with Facebook, you go into Amazon," he added. "The ECB and the Fed have pushed people into risk assets. Apple's really not a risk asset; it's just benefited from everyone getting pushed into the market."

Craig Johnson, technical analyst at Piper Jaffray, conceded that investors looking for a stock to grow their money shouldn't expect that from Apple. However, he still likes the now-$108 stock at current levels.

"The stock has been very resilient, it's found support four times at that $90 level," Johnson said on "Trading Nation." "[There's] more upside to come, but again this isn't going to be one of those big long-term winners."

He sees the stock eventually rising to $122.


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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