After being clobbered, Apple shares look very attractive

“The recent drop in shares of Apple (AAPL) has probably been more pronounced than most expected. It’s true, the stock was very expensive at its all-time high of more than $200 per share (40 times forward earnings), but the catalyst for the sharp $80 per share drop we have seen recently was the company’s extremely conservative guidance for the current quarter,” Chad Brand writes for Seeking Alpha.

Brand writes, “Apple always sandbags quarterly guidance, so this did not come as a surprise, but evidently investors were hoping they would have been a little less cautious. However, in this day and age, when quarterly guidance is given simply to help out Wall Street analysts, under-promising is the only way to go. This is true even more right now, as the economic climate is highly uncertain.”

Brand writes, “Despite all the reasons to be worried, the fundamental story behind Apple is still strong.”

Brand writes, “The current share price of $119 looks very attractive if investors are willing to wait out the uncertainty in the economy. Not only does Apple stock trade at only 22.6 times this year’s expected earnings, which will likely prove conservative as usual, but the company has quietly been building up a gigantic pile of cash… Apple currently has $21 per share in cash, with no debt, yet another reason to be attracted to the current stock price after a drop of more than $80 from its high.”

Full article here.

18 Comments

  1. Clearly, Gateway and Dell are better positioned for the future.

    Let’s all agree to always use those two names together from this point. Add beleaguered if you feel compelled, I know I will.

  2. …the catalyst for the sharp $80 per share drop we have seen recently was the company’s extremely conservative guidance for the current quarter,” Chad Brand writes for Seeking Alpha.

    wrong. See the article stating the big hedge funds had planned to push the stock down to $130 regardless of earnings or projections. The stock was manipulated. The price is not related to real value. Apple stock will rise when the big funds decide to get back in. See Macdailynews 1/24/08.

  3. Bought in 2000 @ $9
    Bought in 2007 @ $128
    Bought on 22 JAN 08 @ $156 (quarterly financials day)
    Bought today @ $119

    I’ve yet to sell. I’m in for the long term and I ain’t flinchin’!

    I’ve always bought into AAPL on the faith that its a solid company with continued growth and a bright future.

    Faith or fear, take your pick.

  4. A growing number of investors have serious doubts.

    Perhaps MSFT would be a safer, long-term future bet?

    I will cede that MS’s stock hasn’t imploded as of today. Let’s check back in 2-5 years, when the Yahoo and Windows 7 wrecks are in full swing.

  5. This advice is so wrong. AAPL is a growth stock showing weakness. Now is NOT the time to buy.

    Just look at the volume on the down days. It’s huge. That tells you that institutional investors are headed for the exits.

    It’s well below the 200 Day Average. Wait for it to show strength with a good setup. Buy on Fundamentals (which Apple has) and Technicals but SELL on Technicals only. The technicals for Apple look really bad right now.

    It doesn’t mean that Apple is a bad company, just not a great investment at this time.

  6. After being clobbered, Apple shares look very attractive @ $120
    Ockham Research: Apple shares are low hanging fruit @ $130
    Will Apple shares ‘break out’ over earnings? @ $140
    Adam Lashinsky: Apple shares look pretty cheap right now @ $160
    Jim Cramer: Apple shares will hit $300 this year @ $200
    Is there a pattern here? I think some of these guys could give Laura Goldman a run for her money.

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