Analysis: Now is the time to buy Apple stock

Posted:
in AAPL Investors edited January 2014
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.
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Comments

  • Reply 1 of 151
    irelandireland Posts: 17,751member


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

  • Reply 2 of 151
    ubernautubernaut Posts: 25member


    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.

  • Reply 3 of 151
    godzillagodzilla Posts: 156member


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

  • Reply 4 of 151

    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.

  • Reply 5 of 151
    drobforeverdrobforever Posts: 400member


    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.

  • Reply 6 of 151

    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?

  • Reply 7 of 151

    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?

  • Reply 8 of 151
    just_mejust_me Posts: 590member


    waiting for sub 500's

  • Reply 9 of 151
    drobforeverdrobforever Posts: 400member

    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.

  • Reply 10 of 151
    island hermitisland hermit Posts: 6,217member

    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 ]

  • Reply 11 of 151
    bc kellybc kelly Posts: 148member


    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)

  • Reply 12 of 151
    rasimorasimo Posts: 60member
    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."
  • Reply 13 of 151
    mjbauermjbauer Posts: 11member


    I hope he is right, I just bought some

  • Reply 14 of 151
    alexmitalexmit Posts: 112member


    Analysis: Never buy when an analyst says to.

  • Reply 15 of 151
    island hermitisland hermit Posts: 6,217member


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

     

  • Reply 16 of 151


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

  • Reply 17 of 151
    dasanman69dasanman69 Posts: 13,001member
    bc kelly wrote: »
    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.
  • Reply 18 of 151
    cpsrocpsro Posts: 2,896member


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

  • Reply 19 of 151
    pcclonepcclone Posts: 9member
    Bought at 605 which is not looking good. However, the 218, 238 and 250 is.
  • Reply 20 of 151
    anantksundaramanantksundaram Posts: 20,225member

    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?

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