I have two views on $APPL as an investment, the short-ter
m and the long-term.
Short-term: Considering the stock is up 44% from mid-December, the stock is overbought and is more than due for a pullback. The chart also shows an RSI reading of nearly 100, again suggesting a normal/healthy pullback is very likely. Technically the chart suggests $AAPL could fall back to the $480-$500 area and remains very bullish. Today the stock is falling to the $530 area and do not be surprise if there is more weakness in the coming days/weeks. Also, keep in mind that a fall from $545 to $490 is similar to a stock falling from $54.50 to $49.00 - it is not the end of the world for $AAPL. This is a normal 10% correction after a massive short-term rally.
Long-term: The long-term chart remains one of the best in the market and after a normal pullback, it will once again be a screaming buying opportunity based on both the technicals and the fundamentals. The projections are for $AAPL to earn approximately $42.73/share in 2012. Based on the current price of $530, that puts the P/E ratio at 12.4 - lower than the S&P 500.
Looking ahead to 2013, the earnings estimates are $47.49; based on 2013 the P/E ratio is 11.16. IF the stock pulls back as I believe it will, buying at the mid-range of support at $490 will have the 2013 P/E ratio down to 10.3 - again a screaming buying opportunity for an above-average growth company.
Then there is the unknowns - will $AAPL release the Apple TV set that many anticipate? If so, I believe that will be the next huge game changer in electronics and technology. As far as a price target, considering $AAPL often beats estimates I can see $50/share in earnings in 2013 and based on a 15.0 P/E ratio that would value the stock at $750! This is very possible and if that target is reached and the entry is $490 - the profit = 53%!!
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