Apple, Inc. (AAPL)

PouyaZ (72.31) Submitted: 4/05/08 9:21 AM : Start Price: $140.87 AAPL Score: 32.86

You have to ride the wave with Apple stock - shorting it in January and February and buying it in March. Between the beginning of the year and early March, Apple stock took about a 34% beating because (1) the technology sector as a whole got hammered; (2) Apple consumer products are not expected to sell well during a recession; and (3) MacWorld didn't live up to its hype. It would have been smart to short the stock during this period, because the catalysts were so obvious. Its technical rating is average and its industry group's relative strength is very weak right now. However, it has excellent fundamentals, EPS, marketing, and management and there is no way this stock is going to stay at low levels. It has always been about predicting the bottom then buying low. I believe the bottom occurred at about $119 around early March and predict that it will make a rapid accession to the its previous levels. Its P/E is 33.58, which is about double all its competitors. However, that is still about the lowest it has been in one year and taken into account growth (22.38% next 5 Years per annum) PEG is only 1.32, which is average for its industry. That is too cheap, Apple should be trading at a premium. Moreover, Apple has beat EPS consensus for at least the past 11 quarters, all by healthy surprise percentages. Apple's economic engine is really iTunes and the iPhone (both the phone and the subscriber cut from AT&T). Decreased inventory of current iPhones, Apple's product cycle, and news from AT&T make it likely that the next iPhone is probably going to come within the next month or so if not sooner. It is likely to have GPS, and maybe even an OLED screen (more energy efficient, thinner, and more vibrant) and GPS (instead of BS Google maps and triangulation). This will obviously be a catalyst, because it will sell very well - people have been waiting for 3G data connectivity speeds, new applications and games (watch out Nintendo and Sony) from the SDK will attract more customers, and the enterprise options will attract small businesses (some marketshare from RIMM, but RIMM will still have a hold on larger businesses for the time being). The MacBook Air hasn't been a run-away hit, but it is another halo product and Mac sales have been increasing, even during our slowing economy. In addition, Apple fanboys, Fashionistas, and females are three groups that will continue to stay loyal to Apple. The shorts are not holding this stock down as only 2.7% of float at shorted. One year target price is around $190 to 200. You should be careful, however, because Apple tends to be priced for perfection and thus can be very sensitive to bad news.

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