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Lulupoopsalot (91.19)

I Own Apple & Now I Own More

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November 16, 2012 – Comments (5) | RELATED TICKERS: AAPL

I was one of the lucky ones.  I got my first Mac back in 2000 right when they introduced the "Clamshell" laptop computer.  I still own it as a matter of fact.  I was sold on the product, software, and future for Apple from that day forward.  Apple was the first stock I ever bought and still hold.

It has been years since I added to that position.  But today I just pulled the trigger again.  I believe the future still looks very promising for Apple.  But this is the very definition of catching a falling knife.  Why am I doing this? Well for one, the amount I just bought will never ever damage my returns I've experienced over the last 12 years so there is that bit of safety.  But more important if you were to look at a 3 year chart of Apple you'll notice that it is at what I believe represents stability in the form of long term holders.  Also, I believe I know oversold conditions when I see them.  I want to have a little extra in for that snapback rally that I'm anticipating.  We all know that can't build iPhones fast enough.  We all know they are taking market share from PC makers and that will continue.  Finally, we all know that once you have an iPhone you need an iPad then comes the iMac.  Apple is winning over new users all the time and this won't stop.  I am still very bullish on Apple for the future.

 So let's see what I got for my money.  A company with no debt and a huge pile of cash.  A P/E of 11.65.  YoY revenue growth of 27% and a YoY of earnings growth of 24%.  Trading $100 below the 200 DMA of $610.  A RoE of 35% and a RoA of 23%. Oh, and a forward PE of 8.  Value, growth, and awesome buying opportunity with this dip all in one simple transaction.  Sold.

5 Comments – Post Your Own

#1) On November 16, 2012 at 2:08 PM, Schmacko (93.87) wrote:

I think you got some more short term pain in front of you... though it sounds like you have a nice cushion.  Many insitutional investors have truckloads of apple stock.  The stock is only up about 28% for the year after the fall and the insitutions will probably keep dumping through December to make sure they lock in some gain for the year.

I've also read theories that Apple might be transitioning into a value company from a growth company.  There last release wasn't really anything innovative.  The thinking is that the next "big announcement" from Apple might be increased dividend or share buyback and not new tech.  If apple stops being a trendsetter growth investors will continue to exit stage left and there will be turbulance while value investors look for attractive levels to enter. 

I personally wouldn't start or add to any long positions before January.  But that's just me.  Good luck.

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#2) On November 16, 2012 at 2:48 PM, miteycasey (91.01) wrote:

Jan. 2 look out!

The cliff and the end of the year selling. SHould be an interesting day.

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#3) On November 16, 2012 at 4:23 PM, ChrisGraley (31.45) wrote:

Not really sure what you see on the horizon? I think they need another innovative product to continue to grow. I'm not enthusied about the Apple TV product. Ipod and Iphone 17 won't help them. What do you see that I don't?

Not being condensending, but just trying to figure out what I am missing. 

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#4) On November 19, 2012 at 10:14 AM, Louebsch (< 20) wrote:

"We all know they are taking market share from PC makers and that will continue.  Finally, we all know that once you have an iPhone you need an iPad then comes the iMac.  Apple is winning over new users all the time and this won't stop.  I am still very bullish on Apple for the future."

I would be careful here. There is a difference between the apple products winning over market share and the technology itself winning over market share. Samsung provides some strong iphone competition and I am willing to bet that there will be other players in the ipad markets before long if they are not there already. PCs will continue to see their market share decline, but they will never go away. There is too much power in a PC vs a handheld device. The average consumer no longer needs the power of PC and can complete their tasks on a lower powered handheld device. So more consumers will be interested in the handheld/tablet market in the coming years, this is why Dell is falling. Dell sells old technology and has not adapted to the tablet industry yet.

Also, apple has a bit of "trendiness" or "fashion" to it. As we all know, trends and fashions change quickly. Even facebook will be replaced one day. Not a matter of if but when. It certainly won't happen over night, but I think Apple is one that does not look great over the long haul.

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#5) On November 26, 2012 at 9:39 AM, Lulupoopsalot (91.19) wrote:

Up about 13% since the buy.  Put in a 3% trailing stop to lock in profits no matter what.  I personally think this was a successful trade.  Thank you all for your input.

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