Apple looks like an opportunity!

There has been a fair amount of negative press concerning Apple over the last few weeks. First there was the Apple map saga which required a formal apology from CEO Tim Cook. This would have had Steve Jobs rolling in his grave. And now there are talks of production concerns, a fall in demand for the iPhone 5 in the US and some issues with the iPhone 5 cover. This has caused the share price to pull back more than 14% from its recent highs.


I came across this article yesterday titled Apple $1000: Why it's time to buy which takes a detailed look at the fundamentals behind the Apple numbers and the share price. There are some interesting graphs which show how the average PE ratio has been on a constant decline even though the share price has been growing. Here is an extract which makes a compelling point.


"Meanwhile, Apple is busy selling every iPhone 5 it can make and has already suggested that it plans to sell 50-60 million iPhones this quarter which would drive EPS up to nearly $20.00 or 44.2% higher than the year-ago period. Yet, instead of breaking out above $700 a share in an effort to stay ahead of P/E compression that will surely hit the stock once Apple reports earnings, Apple has tumbled 12% off of its highs. Apple is setting up to repeat what happened in January 2012 and it seems a lot of people are just sitting there twittling their thumbs."


I am in full agreement. We have often commented on the endless possibilities for this company with their integrated approach and massive customer base. That is still to come however. At this stage the focus is on their current hardware business, namely the iPhone, iPad and Mac computers. According to the article Apple plan on delivering more iOS devices in the first 2 quarters of 2013 then they will the entire 2012. This should see a huge profit increase even though heavy capex has been pushed towards delivering so many goods so quickly.


We think it is absolutely ludicrous that a company like British American Tobacco can afford a higher rating than Apple. Not only is Apple defensive because of its brand domination but it is innovative, exciting and changing the world for the better. In the long term I believe this anomaly will change.


On this basis I would certainly be taking advantage of this pull back. If you have accounts with us in New York and have some cash from the constant dividend flow give us a call and we can add some Apple shares to your portfolio.