Saturday, December 15, 2012

Apple (AAPL) Retest's Recent Lows

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Warren Buffett has always reminded us that “price” is what you pay and “value” is what you get.
Apple once again tests the $500 level and has declined over 27% from its 2012 high of $700. ITZ has over the recent weeks noted how cheap Apple's valuation has become and remains.

How cheap has Apple become? Well that's look at a few other technology companies. Google, Amazon and Facebook.

Current fundamentals:

Apple remains the cheapest stock valuation on the market when assessing not only its current fundamentals, but its forward-looking potential as well.

ITZ continues to pound the table on Apple's ex-cash valuation, with $125 per share in cash this year & $165/$170 in 2013. UBS lowered earnings estimates for next year from $51.50 to $47 per shares & a price target from $780 to $700. But, they also issued a buy back in July 2012 PT $740, then raised that target in Sept to $780.

For whatever reason of selling, Apple one of the most owned stocks had a great year, normally we see year end 'sell the loser' tax loss. But with the Fiscal Cliff looming and certain higher capital gains next's more like sell the winners in '12 and losers in '13.

More than likely the current sellers will be back, with some action in DC & Apple reporting holiday earnings in January. Could we see lower prices before then? Well one cannot discount that, but one should use this opportunity to buy.  With five-year PEG ratio is 0.5  and a 2013 ex-cash p/e under 7 times...this stock is a ridiculous screaming BUY!

ITZ has a $50 earnings estimate for 2013, with a 12 times ex-cash valuation target of $775

Recent Apple post

1 comment:

Conan said...

First time to your site. Great stuff. Your call on APPLE lines up well with some Elliott Wave counts that suggest we are in P Wave 4 down to $494/$464 range and then Wave 5 to new highs in 2013.

I have a ton of Jan 2014 700/800 and 760/810 that I bought in May. Taking a big drawdown and concerned. Do you have an opinion. Plan to hold and sell at better exit maybe after earnings and then roll down into more conservative strikes for Jan 2014on a sell off and lower PE.

Could I get your opinion as to sell here and buy back in the $470/$480 range or suffer more drawdown.