I want to add Apple (NASDAQ: AAPL) to my portfolio. I've been thinking about it for a while. I blew the opportunity of the most recent pullback. But that's in the past. So, what should I do now?
I'm a little reticent about buying Apple at these levels. Why? Is it some fundamental reason? Some overly technical reason? Well, it's more the latter than the former, but to be quite honest, it's mostly a gut feeling. I'm worried that the stock is going to flounder around throughout the dog days of summer. Yesterday's closing price of $176.84 is comfortably away from the 52-week high of $202.96, and it is well above the 52-week low of $111.62. If the stock went back to its 52-week high by the end of the year, that would represent a double-digit gain. AOL Finance gives the stock a forward P/E ratio of 31. For a company like Apple, one that has excellent growth prospects ahead of it, that isn't bad.
As many have observed, this tech company, an arch competitor of Microsoft (NASDAQ: MSFT), is a cult stock. Not only does Apple have rabid fans eager to buy its iPod and iMac products, but it has an avid following for its shares. If Apple could just get one more big dip, I'd think seriously about buying in. As of now, I just can't bring myself to pull the trigger. Perhaps during the summer Apple will see a nice retreat from current levels, and it will be an interesting idea ahead of the Q4 holiday season. I will be keeping my eye on Apple.
Disclosure: I don't own any company mentioned here; positions can change at any time.
Reader Comments (Page 1 of 1)
6-17-2008 @ 10:31AM
FMarra7777 said...
Well Steve.... Do you think that you can time the market? GOOD LUCK!!!
BWA!HA!HA!HA!
6-17-2008 @ 12:26PM
Beltway Greg said...
Steve,
I hate to be blunt, but mutual funds and ETFs may be the way for you my friend. When Apple went to $115 that was, to quote Steely Dan, "A Royal Scam," or in your case the buy of the century. At that time another of your blogging stocks co-horts, the professor from Babson College, ruminated that Apple may go to $100. The fact that Apple ever got to $115 is a reflection of short term fear (and selling by major funds/banks to raise capital), and the effect that it has on the markets. In short, you should've added then. But, like most investors you run with the pack destined forever to be the first to sell and the last to buy back. Hence, my first exhortation regarding mutual funds and ETFs.
Cramer should apologize to America for calling Apple uninvestible if something should happen to Jobs. If Jobs were to leave the company would take a hit but then slowly rise, and then jump quickly when investors realized that the products in the pipeline were still highly profitable. Greater run-ups have been built on lesser factors.
How can a company which trades 32 million shares a day, is covered and owned by countless analysts, and hedged by the hedgiest of the funds be considered a 'Cult stock"? Microsoft which has gone nowhere for 5 years is a cult stock and its founder is quite healthy. How come no one complains about how Gates sits on your money or gives it Third World causes or has become more of a celebrity hanging with Bono and Angelina Jolie at Davos then actually performing his duties as CEO? Why doesn't somebody write about that?
Recently, utilities have performed better than Microsoft. The next time Microsoft reports earnings and has a spectacular $1 dollar run let's jump all over that shall we?
Once again, I called a drift, but in this case a plummet back to the mid $160s right here two weeks ago but I didn't think it would happen so fast. Personally I think we'll see $205 by mid-July, after another record quarter before another sell-off before things explode this fall.
Of course, if Bush bombs Iran, all time tables would have to be adjusted downward.
In conclusion, you're watched it run from $115 to $190. Why should you do anything different? Of course you'll buy in at $230 sometime in Oct/Nov. and watch as it runs to $260 by the end of the year.
Think Different Dude.
Beltway Greg
6-17-2008 @ 2:01PM
BILL said...
I think Beltway Greg analyzed it quite well for Steve.
I was such an Apple idol that I sold every share of every stock I owned in February of '97 and bought all Apple. Not what the books tells you and certainly not what ranting Cramer tells us, but I did it.
Sold it all for 184 about a week ago and when it came down to 172 recently, I bought most of it back. Lucky? Intuitive? Maybe both. My timing, although unusual, was right on. Today it is back to the 180's.
It's the stock, not my intellect. It will run during the summer and it will certainly run because of the 70 countries buying it starting with July 11.
It's hoards of lovers will still buy it, still brag about what the Iphone can do, still entice others to buy the "best" in the marketplace.
Enjoy the ride. Maybe a few short bumps, but you will have time to count your winnings, sooner or later.
6-17-2008 @ 2:05PM
BILL said...
Sorry, make that February of 2007. not 1997.
I could never hold a stock that long.
Bill
6-17-2008 @ 9:29PM
Neil Anderson said...
Cult stock? You're about ten years behind the times. :)