“Apple stock has fallen from $705 to as low as $632 in the last two weeks, which makes it very attractive from a valuation perspective. The old adage ‘Buy Low Sell High’ applies here but it feels like when it comes to Apple, investors lose confidence in the stock when it begins to fall,” Darcy Travlos reports for Forbes.
MacDailyNews Take: Thank heavens for that!
“Conventional wisdom would say, if you like a stock at one price and the fundamental remain in tact, then you are really going to like it 10% lower,” Travlos reports. “What is wrong with Apple right now?”
“Investors are worried about iPhone5 sales. First, the concern was that Apple only sold 5 million on the first weekend. But, 5 million was a blow out by any criteria,” Travlos reports. “Second, the concern has become that issues at Apple’s manufacturer and assembler, Foxconn, suggest that Apple will be limited in its ability to supply iPhone5s in the December quarter. It is a legitimate concern that supply could be limited in the December quarter, but, remember, we are only eleven days into the December quarter and Apple has a strong track record of consumers waiting until they can get the products they want. Every quarter that the market dings Apple for consumers waiting for the product until the next quarter, Apple produces a monster subsequent quarter.”
Travlos writes, “Look at the long-term price chart of Apple in context of other periods when noise in the market shook investor confidence and see that Apple continues to push through these periods. At $630, Apple trades at less than 10x FY’13 earnings (excluding cash), is growing conservatively at 20%, and has $117B in cash and investments on its balance sheet. Apple remains a better buy today at $630 than it did two weeks ago, certainly. Invest for the long term.”
Read more in the full article here.