“Apple’s stock seems to know no bounds: It’s hitting another record today,” Matt Krantz reports for USA Today. “But history, valuation and analysts show there’s resistance facing the stock at $133.02.”
“Even good stocks can get overvalued – which is something everyone playing with stocks need to be careful of,” Krantz reports. “The first warning sign is coming. Shares of Apple are now trading for 17.2 times its diluted earnings per share over the past year, according to data from S&P Capital IQ. That’s very close to the 18 times valuation that’s been a problem for the stock twice before. Not just a little problem – but a big one. It was shortly after hitting 18 times diluted trailing earnings that Apple stock completely fell apart in Oct. 2012.”
“Could Apple break the 18 P-E spell? Absolutely. Bullish investors might decide this company is worth even more than it has in the past – and pay a bigger valuation. Apple, too, could report another huge quarter of better-than-expected profit. If that happens, the P-E would fall,” Krantz reports. “This time could be different. Sure. But at least consider yourself warned.”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Edward W.” for the heads up.]
And what are the P-E ratios of Goofle and Amazon?
Apple is approaching Wall Street’s Stretched Balloon Theoretical Maximum Limit Law. We all know what happens when you keep trying to inflate a balloon with air. Supposedly Apple stock is at nearly its most vulnerable point. Just one more puff and it’s all over for Apple.
Companies like Amazon, Google, Tesla and Netflix aren’t bound by those laws because they’re special stocks in their own universe that aren’t bound by any natural limits or laws. They’ve been granted super-powers by Wall Street.
/s
Exactly!
I’m frightened Auntie Em.
If you read this carefully, you’ll recognize the superficial nature of its ‘analysis’. It doesn’t pay any attention to WHY “It was shortly after hitting 18 times diluted trailing earnings that Apple stock completely fell apart in Oct. 2012.” Instead, it just notes one single statistic and says that number is scary. At least the lame analysis isn’t based on numerology.
Why do stock investors put up with this crap?
TLDR: AAPL could go up or down. You have been warned.
To be on the safe side you should sell Apple if it goes in either direction.
/s
I sold a few shares today, at an $80/share profit. When Apple hits P/E 18 I might short a few shares.
Did this analyst EVER rate Apple as a buy?
Since the stock is up about 65% over last 12 months, he was screaming and pounding the table a year ago, right?
The more that these brain surgeons warn to stay away from AAPL, the more shares I want to buy…
Just wait until Apple introduces the TV that turns into a flying car powered by Mr. Fusion.
On another front Gene Munster says Buy AAPL!!! They are about to introduce a car with a 60 inch see through screen inside that can be viewed from the back seat and the front seat. It’s a smart TV so it will dope-slap the kids for you every time they ask “Are we there yet.”
Look to see who is taking profits now- to be followed by the “crash” and repurchase at lower prices. Repeat. Its how the insiders win and the little guy loses.