“Apple is trading at [$536 per share],” Darcy Travlos writes for Forbes.
“As recently as April 9, it touched $640. A year ago, it was $332. So the stock appreciated 93% from a year ago to its high, and has retreated 15%. The retreat is making investors nervous because a $94 price drop sounds much worse than a 15% decline on the heels of a 93% run-up,” Travlos writes. “Why is Apple’s stock gyrating so much?”
Travlos writes, “Psychology. Trading. Institutional Ownership. Any or all of these may move around a stock irrationally and create a buying opportunity for long-term investors (ie, be the one who bought at $332 and still has a 67% return to date). Other potential explanations include chatter about subsidy reduction on the iPhone and some data out of Asia that suppliers to the iPhone have cut their orders.”
“Apple, today, trades (less cash) at, seriously, 8x next year’s earnings. People are clamoring over Facebook, which is going public around 50x next year’s earnings. Apple sells products that people want and will pay a premium for over other “similar” products in the market because of the ease of use, the entire Apple ecosystem to which they are attached and the tangible benefits association with them. Facebook sells ads. The ad market can be fickle and unpredictable,” Travlos writes. “Look at Apple’s previous 10% dips, even in the past year, in May, July, September and October. In each case, the stock rebounded within 6 weeks. Long-term investors who build a position now in Apple stock will be very happy by the holiday season.”
Read on in the full article here.
MacDailyNews Take: Manna from heaven.