It’s a battle royale between the two largest S&P 500 stocks.
In one corner of the ring, Microsoft keeps hitting records; otherwise, Apple hasn’t hit a new high since January.
CNBC’s “Trading Nation” asked two traders what the better bet is: the champion Microsoft or the recent underdog Apple?
“It depends on what you value more. Do you appreciate… catching up or do you value long-term growth?” Gina Sanchez, CEO of Chantico Global and chief market strategist at Lido Advisors, said Thursday.
Apple’s comeback from the pandemic lows has slowed since January. While it is up 100% from a 52-week low, it is down 10% from its January 25th high. Shares are down nearly 2% this year, while the XLK tech ETF has gained 8%.
“Now if you look at pure valuation, believe it or not, Microsoft isn’t actually trading at as high a premium as Apple, so while Apple is definitely cheaper, Microsoft is actually cheaper compared to its own history,” she said. .
Sanchez said Microsoft is trading about 20% above its long-term valuations, high but justified given its outlook for its revenue growth trends.
JC O’Hara, chief market technician at MKM Partners, said Microsoft appears to be the stronger contender here. However, that’s not the name he is betting on.
“If you look at Apple and Microsoft, they both trade with such a high degree of positive correlation between their price action. So what makes me think here is that Apple could be the best trade to buy right now,” O ‘said Hara during the same interview.
Just as Microsoft started breaking out to new highs last week, O’Hara predicts Apple will do the same soon.
“As Apple starts to build momentum and break new highs, a lot more eyes will be looking at this stock, so we’re not buying leadership, we’re buying a laggard, we’re buying something that is slowly starting to improve,” he said.
Disclosure: Lido owns MSFT and AAPL. Sanchez has MSFT.