Alphabet Wins Big Or Apple Loses
- Apple trades at a premium valuation in the tech sector, but Alphabet is forecasted to far exceed the growth rates of Apple.
- Alphabet has the potential to out-innovate Apple in the key AV and AR/VR device segments, where Apple has the bigger hype.
- Due to innovation dynamics, growth, and valuation, Alphabet is poised to rally in a bull market while Apple could collapse in further market weakness rewarding a short position.
- The pair trade pays off because the opposite investment should remain flat in both scenarios.
- This idea was discussed in more depth with members of my private investing community, Out Fox The Street. Learn More »
One of the better pair trades to execute right now is going long Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) and short Apple (NASDAQ:AAPL). Both companies fall into the FAANG group of giant tech stocks out of favor in the current market, but Apple remains far too beloved in comparison to Alphabet. Not to mention, one of the more long-term bullish thesis for Apple is actually better played via the more beaten down Alphabet. My investment thesis remains very Bullish on Alphabet, while shorting Apple provides a hedge for downside protection in this bear market.
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