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Author: arthurdnt Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 14423  
Subject: AAPL again Date: 1/14/2013 1:05 PM
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Around $500 right now. Holiday quarter arnings will be reported next week.
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Author: wishiwaspsychic Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13105 of 14423
Subject: Re: AAPL again Date: 1/15/2013 2:02 PM
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And now the stock is under $490. I own a small position purchased at $509, and am content to wait until after earnings to make a further decision as to whether to increase the position.

The stock presently constitutes a very nice value if margins remain high and the company has any revenue growth. Similarly, if margins take a small hit but revenues continue to grow at a brisk pace, the stock also looks quite cheap. But if revenues slow and margins come under severe pressure, the earnings picture may change pretty dramatically. Moreover, given that analyst estimates are significantly higher earnings than the $11.75/share quoted during the last CC, there could be room for further blowback if AAPL "misses estimates" even as it bests its own guidance.

In a perfect world, earnings will be good, but not great, with guidance failing to impress analysts (but also not indicating an oncoming train wreck). The market will declare that AAPL is dead, the stock will drop to ~$400, and we'll be able to purchase shares in an STX type situation in which at a certain price, even if things may get ugly long-term, the weight of near-term earnings/cash flow, balance sheet strength (more AAPL than STX), and possible positive/friendly management moves (dividends, buybacks) makes for a low risk, mid to high potential return scenario.

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Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13106 of 14423
Subject: Re: AAPL again Date: 1/15/2013 7:14 PM
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and we'll be able to purchase shares in an STX type situation in which at a certain price,

You can buy them now.

At a P/E less than Microsoft, Google, Coca Cola, GE, or many other stalwarts.

If they miss on earnings, the stock may sink a bit more, but a P/E less than 10? Seems unlikely. OTOH, if they kill, the stock will rocket like a slingshot, and $500 will be yesterday's news.
 


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Author: kelbon Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13107 of 14423
Subject: Re: AAPL again Date: 1/15/2013 11:58 PM
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At a P/E less than Microsoft, Google, Coca Cola, GE, or many other stalwarts.

True enough.

But, the issue I see with the common perception that Apple's stock is so cheap is that not only has the stock price run up in a dramatic fashion earnings have too. All well and good if earnings improve from here on, even if only modestly.

Earnings have risen so dramatically that based on 2010 per share earnings Apple's P/E is 32; based on 2011 earnings: a P/E of 17.5. And, at the current stock price taking the average earnings of the last five years the P/E is 23.

Although to the Apple faithful it's unthinkable that the company's earnings will evaporate as quickly as they materialized, It's the fear that they might contract at all that accounts for the pull-back in the stock price and uncertainty in spite of everything.

It's worth considering that because earnings have risen so far, so fast, that they could be vulnerable on this basis alone.

kelbon

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Author: mungofitch Big gold star, 5000 posts Top Favorite Fools Top Recommended Fools Feste Award Winner! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13108 of 14423
Subject: Re: AAPL again Date: 1/16/2013 11:27 AM
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If they miss on earnings, the stock may sink a bit more, but a P/E less than 10? Seems unlikely.
OTOH, if they kill, the stock will rocket like a slingshot, and $500 will be yesterday's news.


To put it in the language of one of those propeller-beany types,
stock price movements do not exhibit a normal distribution.
Value stocks in particular exhibit pretty strong positive skew.
Translation: bad news causes small dips but good news causes big rises.
Large price excursions to the low side are rarer than large price excursions to the high side.
(the reverse for glamour stocks)

Jim

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Author: kelbon Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13110 of 14423
Subject: Re: AAPL again Date: 1/16/2013 5:07 PM
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Value stocks in particular exhibit pretty strong positive skew.
Translation: bad news causes small dips but good news causes big rises.


Logically, this should be true, but on a case by case basis, not so much. For instance: Western Union with a trailing P/E of 9.5 at $19 a share disappointed the market and the stock plunged to a low of $11.90 in short order — a 37% haircut.

I'm inclined to think that Apple, in spite of it's low valuation based on recent earnings, is more vulnerable than most "value stocks" to a sharp stock price contraction if earnings and margins disappoint.

kelbon

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Author: haywool Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13113 of 14423
Subject: Re: AAPL again Date: 1/17/2013 7:32 AM
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OK Jim !

So when will AAPL "become a glammer stock"?

Rich (haywool)

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