Let me preface this article by saying that I am by no means an expert in finance, risk calculation, or the current state of the stock market. That said, I think there has been a lot of jumbled advice being thrown around about Apple (AAPL) in the past few weeks, and I mean to throw in my two cents about the company with a little bit more resolve. Take it how you please.
As most investors know, for the last 4 years Apple has been an incredibly profitable company to invest in, provided you invested correctly. The stock was at a 52-week low in 2009 at about $90, shooting up to a high of $705 in 2012. However, since 2012, the stock price has plummeted to what seems an improbable low of around $450 for what once was the most valuable company in the world. Provided you bought apple in 2009 and sold in 2012, you would have made 780% of your initial investment. But what caused Apple to shed over 35% of its value over the last few months? That is the most important step to figuring out what to do with the stock.
I’d like you to picture Apple in 10 years. Go ahead; close your eyes and picture where you see the white knight in the year 2023.
For some, Apple is dead. Crushed under the weight of behemoth companies such as Samsung in a rivalry for market share, without its captain of creativity, Steve Jobs, at the vanguard – unable to compete in an increasingly competitive market. For others, whom I like to call the ‘dreamers,’ Apple has regained its near monopoly in the gadget market, despite no longer being the clear leader for high tech niche products.
I am currently sided with the former opinion in the long-run, as much as I’d like to be a dreamer. However, in the short- to-medium run (the next few months), I’m actually quite optimistic about Apple. Provided Apple doesn’t throw a curveball at investors, I see Apple rising moderately through these unstable times. From March 13th to March 22nd, Apple consistently beat out companies such as Google (GOOG) and Dell (DELL) and made gains on bearish days where almost every tech company fell in value. Popular opinion has Apple at a ‘tentative buy,’ and other sources advocate a vehement avoidance of the company. Why am I buying Apple?
Well, we should look to two reasons: trends and context.
Trend-wise, Apple looks good. The company has fallen from it’s previous high but looks to be on track for some serious gains. Context-wise, Apple has been facing serious rivalry from Samsung, but I believe the current overwhelming popularity of the iPhone in countries such as China is not adequately reflected in its stock price. Therefore, I believe the company is undervalued, and is a “buy.”
However, I’d like to remind you that I’m talking short-run to medium-run here, meaning over the next month or two, I expect Apple’s stock to reach 500 to 550 dollars a share, which is when I will sell, ceteris paribus.
After that, I likely won’t be touching the company with a 50-foot pole, depending on the exact circumstances of the company’s outlook.
Note: The views expressed in this article are those of Therealmacgenius.com. However, we encourage you to take caution with your investments and therefore we hold no liability in losses. Material taken from this article is to be cited as from Therealmacgenius.com. Stock graph extracted from Yahoo! Finance 2013.