The case for a big Apple turnover

Apple fell 1 percent Wednesday and has underperformed the S&P 500 by about 8 percent over the past month — but after poor postelection performance, some say that the tech giant is set to stage a turnaround.

"Apple has been a little bit underwhelming, but the truth is they have the time, they have the talent, and they have the cash to kind of keep going until they figure it out. So we really think on any kind of relative valuation basis, this is a great story," Max Wolff, market strategist at 55 Capital, said Tuesday on CNBC's "Trading Nation."

Apple's recent performance is indicative of a broader trend in rotation from "extra excitement about tech and growth" into assets considered to be safer as the market will become more volatile, he said.

Yet the stock looks to be a relative bargain, according to Wolff. "If it's overvalued, it's a lot less overvalued than almost anything else, you could probably buy in a marquee name."

Indeed, Gene Munster, senior research analyst at Piper Jaffray, wrote in a note last week that he recommends buying large-cap internet stocks at these levels despite the sell-off in the group, and describes this time as a "rare opportunity to buy pullbacks in companies with clear multiyear revenue earnings trajectories warranting higher valuations."

"We would be buying the fear priced into internet mega-caps, with concerns of President-Elect Trump's impact on tech companies being largely extrapolated from sound bites that are unlikely to manifest during Trump's presidency, in our view," he wrote of Apple, Amazon, Google, Facebook and Netflix.

Trump has castigated Apple's tendency to manufacture products outside the U.S., doubling down on that critique on Tuesday in a wide-ranging interview with The New York Times.

Munster holds a bullish $155 price target on Apple. Analysts' average price target is $130, according to FactSet.

From a technical perspective, charts of Apple appear bullish, according to Ari Wald, head of technical analysis at Oppenheimer. He would mark Apple as a buy at this point in a sector that he says looks strong across the board.

"We recommend Overweight exposure to the Technology sector, and see AAPL as a tactical idea that hasn't run up as much as the rest of the sector," Wald wrote to CNBC on Tuesday.

"The stock has largely underperformed since peaking in May 2015, now seeing signs of a reversal that bears resemblance to the reversal in shares in 2013," he wrote, adding that Apple could "benefit from some rotation."

The S&P 500 information technology sector over the last month remains virtually unchanged, making it the third-worst-performing sector in that time frame.


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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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