Now is the time to buy Apple

Ignore the short-term negativity and look instead at how the new iPhones will appeal to 2 key markets.

By Jonathan Berr Sep 11, 2013 9:31AM
Apple's (AAPL) two new iPhones may not be as groundbreaking as some people had hoped, but they may be good enough to give the company's moribund stock price the jolt that has proved elusive this year.

The company, which gets about half its revenue from the devices, is making the right moves at the right time by offering options to customers of differing means.
Cash-strapped users who are looking to get the most bang for their buck may find the colorful, plastic 5c (pictured below), which starts at $99, to their liking. So-called early adopters are going to like the 5s, whose processor is twice as fast as its predecessor's and 40 times as speedy as the first iPhone's. It also features a new, more powerful camera and a fingerprint security device that analysts say make it attractive for mobile commerce.

Shares of Apple, which had climbed 11% over the past month ahead of the announcement, fell about 2% to close at $494.64 Tuesday in a classic buy-the-rumor, sell-the-news situation. Investors should look beyond these short-term price fluctuations, because the stock is too cheap to ignore.

New iPhone 5C during an Apple product announcement at the Apple campus on September 10, 2013 in Cupertino, Calif. (© Justin Sullivan/Getty Images)The shares trade at a price-to-earnings multiple of about 12.64, which according to Reuters is a five-year low. Expectations for the company have also hit rock bottom. Wall Street analysts aren't seeing much in the way of revenue growth for the next two quarters. Earnings per share are also predicted to fall during the same time.

Though this sentiment seems ominous, it presents a rare buying opportunity for Apple shares. For all its weaknesses, Apple is still an aspirational brand. That means quite a bit in these uncertain times.

If the 5c can win over at least some users in markets like China who are buying low-cost phones powered by Google's (GOOG) Android, Apple will be in great shape. The 5s seems like it's cool enough to win over Apple fans who want the latest and greatest smartphone. And if the economy goes south, cash-strapped buyers will snap up in the 5c instead of the 5s.

In other words, Apple has covered its bases and covered them well. These new phones may not be a grand slam, but they're well timed to meet the needs of the marketplace. And in today's economy, that's really good.

Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.
Sep 11, 2013 9:56AM
Well the stock is down $23/share as a write this.  So, if you thought it was a bargain before, you must really love it now.
Sep 11, 2013 10:04AM
The real reason the touts say "Now's the time to buy" (or sell): Brokers got babies need new shoes.
Sep 11, 2013 9:57PM
It would have been priceless to hear the collective "oh sh*t" between Microsoft, Google, & Samsung execs when the rumor of a cheaper Iphone became reality:)   
Sep 11, 2013 9:52PM
You don't own Apple  stock yourself, but you're writing it's a great time to own it. Why do I find that notion justlain stupid? Oh, I know why. You have your money in index funds.
Sep 11, 2013 11:47AM
Yes, Yes, & Yes. Give it 6 months and people will catch on to what was just the beginning yesterday.
Sep 11, 2013 10:12AM
The iphone 5c won't be $99 in Asia it'll be more like $599 and up for a Dick Tracy ugly plastic phone.
Sep 11, 2013 9:17PM

Hahahahahahahahahahahahahahahahahahahaha... ahhhh.


Stupid is as stupid does.

Sep 11, 2013 10:54AM
I'd wait two more days for it to go below $400 PS.
Sep 11, 2013 9:49AM
wow looks like lumia apple must be out of ideas so you copy the leader nokia
Sep 11, 2013 10:33AM

Let's see: Fingerprint technology - that eliminates all criminals(based upon prison population - not a small #) and tea partiers(Big bother worries) from ever using the 5S based upon NSA's ability to crack encryption. Small screen - inhibits almost everyone over 50 with increasingly diminishing eyesight. But heh - they come in more colors. CEO gone by year end.

Sep 11, 2013 10:14AM

Try a Microsoft Lumia 920 or 1020 Windows Phone if you really want innovation and performance.

Sep 11, 2013 9:45AM
Ok these new phones do not live up to hype, the "cheap" phone is not cheap enough to ever hope to have penetration into the Asian markets (Apple has only 8% in the Chinese market and this phone is not going to change that) and the 5S model is less powerful then the Galaxy 4 so what does Apple have??????  You got nothing.  Oh sorry a blue or pink colored phone, my bad.
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.
100 character limit
Are you sure you want to delete this comment?


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.


StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

125 rated 1
267 rated 2
455 rated 3
612 rated 4
682 rated 5
695 rated 6
632 rated 7
472 rated 8
279 rated 9
147 rated 10

Top Picks

TAT&T Inc9



Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.