“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.]