The Conservative View on Apple
The short answer, yes it's time to buy Apple Inc (AAPL) but don't expect an incredible return on investment. At this point you should not expect to achieve the average analyst 12 month estimate of $708. That's a big 35% increase in share price if you bought Apple today.
Mastery expects a modest 15 to 20% gain before the year is up, that's a great buy for your IRA or low risk portfolio. Apple is priced well with a P/E of 13.9 and an EPS of 41. Apple Inc. (AAPL) shares are trading up today at $572.95 a share.
With Apple cash pile they could easily take Research in Motion (RIMM) or Nokia (NOK) off the playing field but why bother when you own the No. 1 smartphone in the world -- the iPhone. Apple doesn't need to worry about the iPhone competition, they rule the space worldwide. Recall that Apple squeezed $7.9 billion in revenue out of China last quarter. As TechCrunch points out:
That brings Apple’s revenues in the country to $12.4 billion for the first half of the fiscal year. That’s nearly what Apple made in all of the last fiscal year when it made $13.3 billion in China.
Of course we can't expect China's hunger for Apple to take shares to a new 52-week high alone. iPhone sales are going to slow down once the company announces their iPhone 5 release, same thing will occur with the next iPad. Who knows when or if the iTV will hit consumers but we're sure the world will want that product as well.
This morning Bernstein said Apple could sell 31 million iPhones per year in China by 2015 and perhaps 80 million by 2017. If that's the case it would be a $8 per share EPS increase by 2015 and $12.50 by 2017.
Since May Apple shares have cooled down almost 10%, its an opportune time to review the stock while it trades under $600. Recall all the fanfare of Apple trading over $1,000 per share by 2015 just a few months ago by some insightful and credible analysts. If you believe that is still possible, its time for reflection on the world's most valulable company.
MASTERY Bottom line:
If you can't beat em, join em. Apple will continue to dominate tablet and smartphone sales for the next 5 years. Its a great stock to own for your IRA. At this point owning AAPL is a slow ride for growth that will end positive for 2012.
Best of the Blogs
Scanning and identifying the best blog entries every hour
- China’s New Infrastructure Bank Wins Grudging Assent From the US and Japan | Financial Sense
- A Worrying Set of Signals | Financial Sense
- The Trans-Pacific Partnership: Permanently Locking In The Obama Agenda For 40% Of The Global Economy | ZeroHedge
- How to Become a Superforecaster | Financial Sense
- GOP Chaos: Boehner's Chosen Successor Kevin McCarthy Pulls Out Of Speaker Race | ZeroHedge
- "They're Converging To Dire Levels!": SocGen's Edwards Delivers Critical Warning On Inflation Expectations | ZeroHedge
- Overshooting to the Downside | Financial Sense
The most relevant financial news and articles from the Internets
- The local newspaper in Roseburg, Oregon, has been pro-gun for years | Business Insider
- This booming pizza chain just poached LeBron James from McDonald's | Business Insider
- US stocks climb in early trading, led by energy companies... | Business Insider
- The less you know about 'Room,' the better | Business Insider
- European mining companies are having a great day on the stock market so far | Business Insider
- Tokyo auto show to highlight 'smart' green cars | Business Insider
- Monsanto posts 4Q loss, to eliminate 2,600 jobs to cut... | Business Insider