Will Apple be a buy at $100?

More

With its stock down 38.6% from its December 2007 high of $202.96, I think Apple Inc. (NASDAQ: AAPL) will be a buy if it hits $100.

Since Fortune, which shares parent Time Warner (NYSE: TWX) with BloggingStocks, reports that Apple was voted the most admired company of 2007, I wonder whether it's suffering from the curse of being on a magazine cover -- with that appearance marking its peak. Or will Steve Jobs pull another rabbit out of his hat that revives the company and the stock?

With Apple's stock down 38.6% from its December high, the question is whether the stock is now a buy? Back then I suggested that it might be overvalued. Now that it's down, I think it's fairly valued on the same basis -- its Price/Earnings to Growth (PEG) ratio has declined from 1.8 to 1.1. Specifically, Apple sports a much more reasonable PEG of 1.1 -- with a P/E of 27.4 and earnings forecast to grow 24.6% in 2009 to $6.38.

If Apple stock hits $100 -- and those earnings growth forecasts remain the same or even rise with a new product announcement -- it would become a screaming buy.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

Reader Comments (Page 1 of 1)

Symbol Lookup
IndexesChangePrice
DJIA+150.2510,058.64
NASDAQ+24.822,150.87
S&P 500+13.781,070.52

Last updated: February 10, 2010: 05:26 AM

Hot Stocks

DailyFinance Headlines

TheFlyOnTheWall.com Headlines

    BioHealth Investor Headlines

    WalletPop Headlines

    My Portfolios

    Track your stocks here!

    Find out why more people track their portfolios on AOL Money & Finance then anywhere else.

    BloggingStocks Partners

    More from AOL Money & Finance

    WalletPop Headlines