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Analysis: Now is the time to buy Apple stock

post #1 of 152
Thread Starter 
Since 2006, independent analyst and AppleInsider contributor Andy Zaky of Bullish Cross has only published four total public buy ratings on Apple stock. Read why on Thursday, he initiated his fifth buy rating for Apple, and first in 11 months..

Today, we are initiating our 5th ever buy rating on Apple just about 11-months after the last recommendation we gave. We tend to only publish these buy rating under extraordinary circumstances, when Apple has been extremely oversold and when the stock's valuation has become incredibly depressed. We also only publish these ratings once the markets have seen a substantial sell-off or prolonged period of consolidation.

The current conditions meet all of our criteria. As a result we are publishing our comments on why it is time to buy Apple. Notice that the last four buy ratings were made right at or near the exact lows each time.

Our buy ratings are a little different than what one would normally expect in that we give a band where we feel the stock is a ?strong buy? and where the stock is a ?buy.? We also give a price target. But what we don?t do is publish an ongoing buy rating. Our buy ratings are thus temporary in nature.

Bullish Cross has never missed a long-term price target on Apple as you can see here. Today we feel that Apple is a strong buy anywhere between $500 and $530 a share and a buy between $530 and $550 a share.

We expect Apple to test $750 a share sometime before the end of this coming January. That is roughly 50% higher than where the stock is trading today.

Zaky


Now here are the reasons why we believe its time to buy Apple and why we feel the valuation is incredibly attractive today. At $533.52 a share, Apple trades at 13x last year?s earnings and at only 10.56x our expect October earnings. Those are incredibly low valuations even for Apple.

At the November 25, 2011 lows, Apple traded at a 13.13 P/E ratio. So today, Apple is trading at a lower valuation than it was at the November lows. At the June 2011 lows, Apple was trading near a 15 P/E trailing P/E ratio.

Those who have been waiting for a correction in Apple to buy the stock, now have that opportunity to do so. On a technical basis, Apple is the second most oversold it has been since the lows of the financial crisis. Only on June 20, 2011 — when Apple bottomed at $310.50 a share ahead of a 30% July rally — did we see more oversold conditions on Apple.

Even the flash crash didn?t result in more oversold conditions nor did any period during the 2010 summer correction. At no time during the summer 2011 correction did Apple see more oversold conditions.

So today, Apple is not only very attractively valued as it trades at a near 8-year low P/E ratio, the stock is also incredibly oversold. Moreover, the stock has now retraced 38.2% of its gains it recorded in the rally between $363.21 in November and $644.00 in April.

At $500 a share, Apple would trade at a 12.18 P/E ratio and the stock would have retraced 50% of its gains. That?s why the area between $500 and $530 presents with a very unique buying opportunity while the area between $530 and $550 presents with a relatively rare buying opportunity that we see a handful of times in a year. You can see our past buy ratings here and the ensuing results.
post #2 of 152

I wouldn't buy just yet. Give it another few weeks.

Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #3 of 152

funny thing i was just thinking the same thing and decided to buy right before seeing this article. i also bought some AAPL the day after thanksgiving that worked out pretty well.

post #4 of 152

Great buy here and tremendous upside. Could go a little lower, but once the bounce does initiate, these levels will be forgotten.

post #5 of 152
Quote:
Originally Posted by Ireland View Post

I wouldn't buy just yet. Give it another few weeks.

I don't think you're right here. Personally I see today as the last major sell-off due to people preparing liquidity for Facebook IPO tomorrow.

post #6 of 152

This guy lost all credibility when he didn't initiate buy rating during the past 11 months, but now.

 

He should've initiated buy ratings long time ago, when the stock was like 400 or even 360.

post #7 of 152
Quote:
Originally Posted by drobforever View Post

This guy lost all credibility when he didn't initiate buy rating during the past 11 months, but now.

 

He should've initiated buy ratings long time ago, when the stock was like 400 or even 360.

 

Um... His last buy rating was 11 months ago, when the stock was at 324.  So, yeah, buy then.  And buy now.  What's the problem exactly?

post #8 of 152
Quote:
Originally Posted by drobforever View Post

This guy lost all credibility when he didn't initiate buy rating during the past 11 months, but now.

 

He should've initiated buy ratings long time ago, when the stock was like 400 or even 360.

 

Um... His last buy rating was 11 months ago, when the stock was at 324.  So, yeah, buy then.  And buy now.  What's the problem exactly?

post #9 of 152

waiting for sub 500's

post #10 of 152
Quote:
Originally Posted by archibaldtuttle View Post

 

Um... His last buy rating was 11 months ago, when the stock was at 324.  So, yeah, buy then.  And buy now.  What's the problem exactly?

 

The problem is, the article is saying as if oh we don't initiate buy ratings often, only when AAPL is incredibly cheap. But the stocks has gone up so much during the past 1/2 year, even with the recent drop, is still a lot more expensive than before. Also, you can't say he initiated buy rating at 324 means he approved buying at 360, 400, 450, 500, etc. otherwise there's no point to initiate now anyway, we should just follow his suggestion 11 months ago. If he didn't inititate buy ratings at 360, 400, 450, 500, etc, he shouldn't initiate it now, because AAPL has not changed during the past 1/2 year, he couldn't explain whyy he didn't initiate the buy rating before the recent run-up.

post #11 of 152
Quote:
Originally Posted by Ireland View Post

I wouldn't buy just yet. Give it another few weeks.

 

 

I'd say you are wrong.

 

AAPL might not hit $644 again for quite a while and there will be ups and downs before it ever tests $750... BUT, I doubt if you will see these levels again once it bounces.

 

There may be some more downward pressure but not much. Buying at this level will seem like a bargain even by August.

 

jmho

 

[ I see there is an echo on this thread ]

Hmmmmmm...
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Hmmmmmm...
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post #12 of 152

Naw  - THE time to buy APPL ?

 

10-odd years ago

 

Think Different, Change the World, AND make a Lil' $umthin'

 

(ty, brain-dead-short-sighted-microsoftian-stock-market, tyvm)

post #13 of 152
Quote:
Originally Posted by drobforever View Post

The problem is, the article is saying as if oh we don't initiate buy ratings often, only when AAPL is incredibly cheap. But the stocks has gone up so much during the past 1/2 year, even with the recent drop, is still a lot more expensive than before. Also, you can't say he initiated buy rating at 324 means he approved buying at 360, 400, 450, 500, etc. otherwise there's no point to initiate now anyway, we should just follow his suggestion 11 months ago. If he didn't inititate buy ratings at 360, 400, 450, 500, etc, he shouldn't initiate it now, because AAPL has not changed during the past 1/2 year, he couldn't explain whyy he didn't initiate the buy rating before the recent run-up.

"Our buy ratings are a little different than what one would normally expect in that we give a band where we feel the stock is a “strong buy” and where the stock is a “buy.” We also give a price target. But what we don’t do is publish an ongoing buy rating. Our buy ratings are thus temporary in nature."
post #14 of 152

I hope he is right, I just bought some

post #15 of 152

Analysis: Never buy when an analyst says to.

post #16 of 152

It's right around here that some good news is announced and AAPL shoots up $60.  ;-)
 

Hmmmmmm...
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Hmmmmmm...
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post #17 of 152

This big dip is just because of the options expire tomorrow.

post #18 of 152
Quote:
Originally Posted by BC Kelly View Post

Naw  - THE time to buy APPL ?

10-odd years ago

Think Different, Change the World, AND make a Lil' $umthin'

(ty, brain-dead-short-sighted-microsoftian-stock-market, tyvm)

2008 was a great time to buy as well, it was well below $100.
"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
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"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
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post #19 of 152

Wouldn't a true professional state: "past performance is not indicative of future returns"?

post #20 of 152
Bought at 605 which is not looking good. However, the 218, 238 and 250 is.
post #21 of 152
Quote:
Originally Posted by Cpsro View Post

Wouldn't a true professional state: "past performance is not indicative of future returns"?

Other than for the presumption that a reader is stupid, that would change the recommendation -- which may  prove right or wrong -- how?

post #22 of 152
Quote:
Originally Posted by Ireland View Post

I wouldn't buy just yet. Give it another few weeks.

I agree. I think the institutional shorts will pressure it down to about $500. Set your buy orders, sit back and relax.

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #23 of 152
Quote:
Originally Posted by johnnielse View Post

I don't think you're right here. Personally I see today as the last major sell-off due to people preparing liquidity for Facebook IPO tomorrow.

 

You may be right, but frankly anyone selling AAPL to replace it with FB is a fool.

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #24 of 152
Quote:
Originally Posted by Alexmit View Post

Analysis: Never buy when an analyst says to.

 

Haha! That's just about any time because there are shorts and there are longs.

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #25 of 152
Quote:
Originally Posted by PCCLONE View Post

Bought at 605 which is not looking good. However, the 218, 238 and 250 is.

 

The question is, why would you buy at 605? Normally for those who bought at 2xx level, they'd have sold most of them, not buy more after it's up more than 200%. Fundamentally, analysts always call AAPL cheap, but it was a lot cheaper at 2xx, 3xx or even 4xx than 605. Technically, it was exploding from 4xx to 6xx, and it's bounded to drop.

 

Anyway, not criticizing here, we all try to learn from our trades.

post #26 of 152
Quote:
Originally Posted by drobforever View Post

This guy lost all credibility when he didn't initiate buy rating during the past 11 months, but now.

 

He should've initiated buy ratings long time ago, when the stock was like 400 or even 360.

 

Quote:
Originally Posted by drobforever View Post

 

The problem is, the article is saying as if oh we don't initiate buy ratings often, only when AAPL is incredibly cheap. But the stocks has gone up so much during the past 1/2 year, even with the recent drop, is still a lot more expensive than before. Also, you can't say he initiated buy rating at 324 means he approved buying at 360, 400, 450, 500, etc. otherwise there's no point to initiate now anyway, we should just follow his suggestion 11 months ago. If he didn't inititate buy ratings at 360, 400, 450, 500, etc, he shouldn't initiate it now, because AAPL has not changed during the past 1/2 year, he couldn't explain whyy he didn't initiate the buy rating before the recent run-up.


I dont think you understand what is really going on here.  You say "AAPL has not changed".  That is not true.  The most recent earning has placed AAPL at a PE of less than 13 at current share price.  When AAPL was at 530 about two months ago the PE was at 16+.  You see Andy publishes his buy recommendations after the stock has sold off and enters PE multiples as low as 13.  As he stated, this has only happened several times in the past (the most recent one being 11 months ago when apple was trading at a PE of 13 again).  I just want to make it clear that it is not the stock price that matters, but the PE ratio, both trailing and forward, and the point is, according to that measure, aapl is a screaming buy right now...  If you dont understand we can try to explain further...

post #27 of 152
Quote:
Originally Posted by ko024 View Post

 


I dont think you understand what is really going on here.  You say "AAPL has not changed".  That is not true.  The most recent earning has placed AAPL at a PE of less than 13 at current share price.  When AAPL was at 530 about two months ago the PE was at 16+.  You see Andy publishes his buy recommendations after the stock has sold off and enters PE multiples as low as 13.  As he stated, this has only happened several times in the past (the most recent one being 11 months ago when apple was trading at a PE of 13 again).  I just want to make it clear that it is not the stock price that matters, but the PE ratio, both trailing and forward, and the point is, according to that measure, aapl is a screaming buy right now...  If you dont understand we can try to explain further...

 

Reliance wholly on the P/E is a fool's game. Just look at AMZN.

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #28 of 152
Quote:
Originally Posted by ubernaut View Post

funny thing i was just thinking the same thing and decided to buy right before seeing this article. i also bought some AAPL the day after thanksgiving that worked out pretty well.


Me too.  Unfortunately I also bought some when it was at $585 a few weeks ago.  Oh well, I'm still up 500% or so overall.

post #29 of 152
Quote:
Originally Posted by SpamSandwich View Post

 

Reliance wholly on the P/E is a fool's game. Just look at AMZN.


Well he does not base it solely on PE...  According to Zacky, "Apple has been extremely oversold and when the stock’s valuation has become incredibly depressed. We also only publish these ratings once the markets have seen a substantial sell-off or prolonged period of consolidation"...  Now if you think aapl will trade at a PE of 10 or less than I can respect that, but if I was a betting man, I would bet on the fact that at the very least aapl will continue to trade at historical levels close to 15ish....

post #30 of 152

Because I plan on holding on to it for 10 years or 750.  

post #31 of 152
Quote:
Originally Posted by ko024 View Post

 


I dont think you understand what is really going on here.  You say "AAPL has not changed".  That is not true.  The most recent earning has placed AAPL at a PE of less than 13 at current share price.  When AAPL was at 530 about two months ago the PE was at 16+.  You see Andy publishes his buy recommendations after the stock has sold off and enters PE multiples as low as 13.  As he stated, this has only happened several times in the past (the most recent one being 11 months ago when apple was trading at a PE of 13 again).  I just want to make it clear that it is not the stock price that matters, but the PE ratio, both trailing and forward, and the point is, according to that measure, aapl is a screaming buy right now...  If you dont understand we can try to explain further...

 

It's not rational to look at P/E using a snapshot. When we buy a stock, we've an expectation on what's the growth rate of the stock for the next few years, and also the valuation at that price. AAPL's business and growth rates for the next few years didn't change during the past few months, in fact, one can argue, iPad hasn't been selling that well compared to expectation, while iPhone has been more-or-less on par, and there's no news on revolutionary new products confirmed.

 

In fact you pointed out what's wrong with this article, basically this guy was taking P/E of 16+ and later 13 like 'oh now it's lower than before'. It's silly, people should've expected that drop in P/E, there's no new information from the change that rational investors wouldn't have known about a few months ago, when AAPL was still 400.

post #32 of 152

I don't usually take investment advice from gossip sites but I have to say the evidence is quite compelling here. I'm tempted to put my life savings into AAPL because I can only see upside from here.

post #33 of 152

I think that FB sucks and it's highly overvalued. I don't even have a FB account, I refuse. And AAPL is of course highly undervalued by wall street, IMO.

 

Therefore, my investment strategy consists of thinking like a complete moron, so I'm planning to buy some FB tomorrow, for a quick in and out move, or maybe a few quick in and out moves. After that I'm planning on buying some more AAPL soon, to hold for the longterm.

post #34 of 152

I am still long though I have taken shares off the table.  The returns were beyond my wildest dreams starting in early 2009... and a lot it was luck on my part.  If anything, I want to keep on selling on the next leg up.  For the new folks, it may make sense to buy at some point.  However, a buy rating now is very different than one 3+ years ago.  The main products, namely the iPhone has reached near saturation in many markets, though still growing in Asia.  The iPad is still a growth story but nothing like the iPhone as best as I can tell.  SJ is not around and those kinds of leaders only come around once in a generation.  Market cap of $500B and yes, it could go higher, but not in multiples.  

 

If I was a new buyer, I would be cautious since the Euro crisis is not something I want to ignore.  It is not just Greece, but the rest of the PIIGS are broke.  Germany itself is saddled with debt nearly close to its GDP and they have crushing taxes.  That whole house of card could come crashing down.  They can not keep this Ponzi scheme going forever.  

post #35 of 152
Quote:
Originally Posted by drobforever View Post

 

It's not rational to look at P/E using a snapshot. When we buy a stock, we've an expectation on what's the growth rate of the stock for the next few years, and also the valuation at that price. AAPL's business and growth rates for the next few years didn't change during the past few months, in fact, one can argue, iPad hasn't been selling that well compared to expectation, while iPhone has been more-or-less on par, and there's no news on revolutionary new products confirmed.

 

In fact you pointed out what's wrong with this article, basically this guy was taking P/E of 16+ and later 13 like 'oh now it's lower than before'. It's silly, people should've expected that drop in P/E, there's no new information from the change that rational investors wouldn't have known about a few months ago, when AAPL was still 400.


I understand what you are saying but I think he is about timing, and part of that timing is when earning are released and PE is affected.  Lets make it really simply.  If my friend had 10k and wanted to invest in aapl....  If it was a year ago, Zacky would have told my friend that at the 310 level in June, that was a "back the truck up" type level. That is to say, feel free to pour your money in, this is at or near the bottom of the recent sell off and aapl is going higher....  Well it did go higher, it went to 400.. Now, what you are saying is that Zacky should have continued his buy rating then.. I understand your frustration there, but Zacky would argue that during the run up from 400 to 500 to 600, these were not "back the truck up" moments... Now that earning have elapsed, PE has compressed, aapl and the markets have sold off, and now at 530 with a PE of 12.9, aapl is a "back the truck up" buy again.. You are saying, well it would have been better to buy at 400s.. sure, but at those levels and at that time, Zacky was not confident in the immediate bounce upwards and my friend investing the 10k may or may not feel comfortable investing at that moment...  Anyway, the point is, Zacky plays it this way, and he has been correct every time....

post #36 of 152

Honestly, I'm counting the days until I unload my Apple stock. I don't have much faith in Cook, and when the bottom eventually drops out, it's going to be ugly.

post #37 of 152
Quote:
Originally Posted by Cash907 View Post

Honestly, I'm counting the days until I unload my Apple stock. I don't have much faith in Cook, and when the bottom eventually drops out, it's going to be ugly.

That makes no sense at all.

 

What price did you buy your stock for? Tim Cook has been in charge for a while now, and Apple's earnings have been sky rocketing under his leadership, setting new record profits for Apple. Why didn't you sell at around 640 if you're looking to get out, like you claim?

post #38 of 152
Quote:
Originally Posted by anantksundaram View Post

Other than for the presumption that a reader is stupid, that would change the recommendation -- which may  prove right or wrong -- how?

Oh, don't be stupid. It provides further evidence that the analyst isn't stupid and serves as a reminder to the reader not to be stupid.

That's how.

post #39 of 152
Quote:
Originally Posted by drobforever View Post

 

The question is, why would you buy at 605? Normally for those who bought at 2xx level, they'd have sold most of them, not buy more after it's up more than 200%. Fundamentally, analysts always call AAPL cheap, but it was a lot cheaper at 2xx, 3xx or even 4xx than 605. Technically, it was exploding from 4xx to 6xx, and it's bounded to drop.

 

Anyway, not criticizing here, we all try to learn from our trades.

 



I think you're not considering the added uncertainty of Apple's sustained business back then at the $200's. Apple fans might have believed Apple could keep on hitting them out of the park, but did your average fund owner really believe that the new coming could again and again kill RIM, and HP, and Google and Samsung and Nokia and Microsoft?

Look how short sighted analysts have been in the past about the impact of the iPhone... again and again.

AAPL will continue to hit these out of the park... iPhone 5 will smash all sales records and blah blah blah. I think the stock will rise up at least to $800 by say Feb 2013.

 

Buying at $600 was premature, but not foolish. As long as earnings projections and growth are right.  I think we'll see a social trend away from AAPL far before we see an earnings trend away. My worry is that very soon, AAPL may make a "real" mistake and leap too high, or not leap high enough and someone else will get more than a foot in the door successful product out there ( looking at Samsung IMHO ) and it will cause people to 2nd guess AAPL. There will be nothing wrong with earnings, or growth mind you but it will cause the stock to plummet back down. ( to where I don't know )

 

No company can keep hitting that sweet spot forever. They'll make a mistake ( like antenna gate ) and the market will overreact and punish.

 

I personally hope we stop focussing on AppleTV's future as a product, and see a headline about Apple buying Disney.

post #40 of 152
Quote:
Originally Posted by PCCLONE View Post

Because I plan on holding on to it for 10 years or 750.  

 

In ten years, we may be trading in "goldbucks" instead.


Edited by SpamSandwich - 5/17/12 at 2:28pm

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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