Is Apple insanely cheap?

For long-term investors, the stock has now become too undervalued to pass up.

By TheStockAdvisors Nov 19, 2012 12:05PM

AppleBy Ian Wyatt, Top Stock Insights

We love Apple (AAPL). It's a great company and a beacon of innovation for the entire technology industry.

As for the stock, we previously asserted that the shares were extremely cheap; however, we suggested waiting until the stock dropped below $550 before considering a new position. That has now happened.

The shares have fallen by more than 20% in about a month. We think the recent selling is completely unwarranted and is instead a result of profit-taking ahead of a potential tax hike.

This means that the recent move lower has almost nothing to do with the fundamentals of Apple's business operations.

Apple stands to clean up from one of the biggest trends in the world -- smartphones. Data compiled by Barron's show that smartphones have decimated PC growth since 2008. Moreover, unit total and total value of sales are higher than that for PCs for the first time.

There's no doubt the "smartphone revolution" stemmed from Apple, which sold more than 20 million iPhones in 2009.

Apple increased that amount to 39.9 million units in 2010 and 72 million units during 2011. Management expects to sell nearly 125 million iPhones in 2012.

In addition to the growth from smartphones, Apple also enjoys the top perch in the tablet market -- a segment that may also overtake PCs soon.

In our view, the shares are now insanely cheap. The stock has a price-to-earnings ratio of 11 times 2013 earnings per share of $50.13 and 9.5 times 2014 earnings per share of $58.70.

Moreover, Apple stock yields 1.8%, making it a perfect fit for our portfolio, which concentrates on dividend and technology companies.

We can't know for sure if the drop will represent "the" bottom, but we can't pass on this opportunity to buy America's favorite (and perhaps best run) company at such a discount either.

More from TheStockAdvisors.com

Tags: AAPL
7Comments
Nov 19, 2012 12:53PM
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"Apple insanely cheap"

 

Thank you, Crazie Eddie Anton.

Nov 19, 2012 12:24PM
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Many of the PC stocks, yes Apple's a PC stock, have become really cheap considering WinARM and WinTel are now mobile too.  Take a look at Apple, Asus, Dell, HP, Intel, Lenovo, Microsoft and Nokia.
Nov 19, 2012 4:35PM
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We were buying lots of stock when the market was down last week.Buy summer clothes

in winter and winter clothes in summer.Stocks were on sale last week when the right

wing wall street guys were singing the blues.

Nov 19, 2012 4:15PM
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they probably need to have a 5/1 split.
Nov 19, 2012 3:32PM
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Hmm...this "article" sounds more like an investment prospectus than an article. I wonder if it's the same guy that wrote an article earlier in the year predicting Apple would go up to $1650/share?

Apple has "insanely" high profit margins. As competitors release similar products (and they are) for hundreds less, Apple will be forced to lower prices, or go out of business. 

But as they lower prices, their profit margins (and profits) tumble. 

Profit projections by corporate shills are meaningless.
Nov 19, 2012 2:50PM
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Yea... no. There is actually a HUGE movement to get rid of the highly distracting brain-numbing i-Phone. It literally can bring cooperation and productivity to zero. Any business that has most of its existence overseas and holds the consumer hostage through legalese and proprietary accessory manipulation isn't good for America. The genius passed away. The over-marketing control needs to move on.
Nov 19, 2012 3:37PM
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I would not be surprised if they did a two for one stock split, this would create more people able to buy their stock which could push the price much higher.
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