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.
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.
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.
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.
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 !
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.
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