Apple plants the seeds of a rebound

The new iOS upgrades are a step forward again. And even its bad times are better than most companies' good ones.

By Jonathan Berr Jun 12, 2013 9:49AM
Hidden in a recent story on Apple (AAPL)  in The Wall Street Journal is a word that until recently few would dare associate with the tech titan: boring. Yet, to many investors, the maker of the iPhone, iPad and Macintosh has become stale and predictable. That sentiment is apparent in the stock price.

Shares of Apple have tumbled more than 17% this year even as the broader market has rallied. The stock has underperformed rivals such as Google (GOOG), which has jumped nearly 25%. Even Facebook (FB), for all its post-IPO woes with investors, has slumped far less, by about 9%.

Apple's sell-off, however, is overblown.

 

The company's problems are well known, such as the surging popularity of Google's Android operating system. Market researcher comScore pegs Android as the top smartphone platform with 52% market share as of April versus Apple's 39.2% share.   

 

When recently asked about Android, Apple CEO Tim Cook insisted he didn't "have his head in the sand." Then he made an argument familiar to Apple watchers: His company is more interested in quality not quantity. Apple's new overhaul of its key mobile operating system, unveiled on Monday, shows that it's backing up its words with deeds.

 

A person takes a photo of an Apple sign with an iPhone (© Lukas Barth/dapd/AP Photo)Thanks to the improvements in iOS 7, which will be available in the fall, Apple should regain some lost ground. For one thing, moving between open apps will be easier, and the iPhone home page and calendar will be spiffed up. As The Journal noted: "The iPhone will be pretty again."

 

Unfortunately, Apple may not get much of an edge from the new iTunes Radio app, which has underwhelmed critics.

 

Despite its many challenges, one thing's for sure: Apple's stock is too cheap to ignore. The current price-to-earnings multiple of 10.48 is at a five-year low, according to Reuters. And Wall Street thinks the stock has room to run. The average 52-week price target is $541.04, about 22% higher than where it currently trades.

 

Apple on a bad day is still a better investment than most companies having a good day. The time to buy the stock is now.


Have any questions about this or any other "Killer Companies" episode, or suggestions for companies to cover? Submit them in the comments section below.

Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.
15Comments
Jun 12, 2013 11:36AM
avatar

I think there are enough people watching Apple and wishing for the profitable good old days to give Aplle one more push higher.  I think this will happen mostly on wishful thinking.  People are waiting for the one new thing, anything.  However, I think longer term Apple has nothing, no moot, no barriers to entry, and really nothing innovative.  It will tweek stuff, but nothing really new.  This is a mature company and will have to fight to stay in the game, not fight to stay on top.

 

Disagree?  Tell me what will keep Apple on top?  Phones are a commodity, now what.

 

So, given that there are a lot of Apple Groupies out there who I believe are willing to pile in on any good news from Apple, buy a bit and take one more short ride.  Once people see that the next "good news" item is just a little bump up, Apple will take its place as a cash cow investment.  Now if it cures cancer or creates and invisible phone or something, then I take it all back.

Jun 12, 2013 11:22AM
avatar

That last sentence says it all. Tim Cook is on the right path going forward. Now is the time to buy this

 

-if you wait much longer, you'll miss out.

 

Then you'll be clamoring about your yammering so we'll be posting here for your hammering !

Jun 12, 2013 12:35PM
avatar
Boring has still been bringing in big bucks. No problem with that.
Jun 12, 2013 12:05PM
avatar
Apple may well see a rebound.  But that won't change the basic problem.  The company has not had release of a blockbuster product since the death of Jobs.  The market wants to know if Cook can continue the legacy of Jobs.  We still don't know.
Jun 12, 2013 2:19PM
avatar
Apple will be below $400 by the end of next year. You can't rely on mindless customer brand loyalty forever.
Jun 12, 2013 1:12PM
avatar
Sheesh, What a bargain!  Silly market sentiment and associated so-called pundits mobbing against Apple .......... once Apple has taken the requisite beating (and IMHO they have now), sentiment will slowly change to rooting for Apple rise like the Phoenix and have a great comeback.   Market should be about the numbers, but in this case, it isn't.  Kind of like old movie plot - Boy gets Girl, Boy losses Girl, Boy gets Girl again.  We've seen this many times before.

Go Apple! 
Jun 12, 2013 1:34PM
avatar
Apple make gadgets - who cares - buy the stock - while Apple waits, Samsung, and Lenovo churn - take a look at the Fortune article on Lenovo. Microsoft - get rid of Windows 8!!
Jun 12, 2013 2:44PM
avatar
what   Do you want someone else giving out all your info.?
Jun 12, 2013 11:18AM
avatar
Ho Hum...another Apple apologist article.  I think their time is over and now they are just part of the whole tech picture.
Jun 12, 2013 1:45PM
avatar
I agree with the basic sentiment that we have seen nothing new lately from AAPL, that cellphones are a commodity most of all that Windows 8 is awful. 
Jun 12, 2013 4:30PM
avatar
We had a IT meeting today and several folks stated "Apple is dead"..sure they may be speculating but other phones are just simply better....
Jun 12, 2013 12:36PM
avatar
What new trick has Apple pulled from their hate?  A largely cosmetic change?  That will make them billions...

People who ignore the parallels between the rise and fall of the Macintosh PC and the smartphone/tablet market will lose lots of money.  Steve Jobs is not around to rescue Apple again.  Apple is finished.

Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

ABOUT TECHBIZ

Start investing in technology companies with help from financial writers and experts who know the industry best. Learn what to look for in a technology company to make the right investment decisions.

RECENT POSTS

Would you pay $700 for Sony's new Walkman?

Hand-carved from an aluminum block, the 128-gigabyte ZX1 resurrects the iconic portable music player -- minus the cassettes -- for premium buyers in search of high-quality audio.

VIDEO ON MSN MONEY

RECENT QUOTES

WATCHLIST

Symbol
Last
Change
Shares
Quotes delayed at least 15 min

MSN MONEY'S