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With Apple Inc. (Nasdaq: AAPL) bears feeling vindicated by the company's fall from grace and shares hovering in the $400 range, it might sound like a stretch to say Apple stock is a buy.
But given all that's happened, AAPL at $400 is a better deal than it may appear.
"It's obviously been hit, but it's bounced. It's held up," said Money Morning Capital Wave Strategist Shah Gilani. Pointing to the recent volatility in the markets, Gilani said, "The markets have been hit really hard and Apple has held up beautifully."
Now it's not likely that Apple stock will take off again like it did a few years ago and shoot up 100%.
But despite slowing sales of the iPhone, the company is still generating profits at the rate of about $40 billion a year and sports a P/E of less than 10. And it now has a dividend yield of about 3%.
The landscape may have changed for Apple over the past year, but it's certainly not the dead money that some believe it is.
In fact, Apple stock could very well be on the verge of a nice little ride to the upside, at least to $500 and maybe beyond.
There are several reasons to think that a rebound in Apple stock is in the offing.
STAID APPLE FAILS TO AROUSE
Apple still has a hill to climb. First of all, most of today's buyers/sellers of Apple stock are speculators, NOT investors. Real investors bought the stock back when it was "on the ropes" in 1998 and Steve Jobs had just come back as CEO. They were losing $1 Billion a year and might have gone out of business. Back then, Apple was a risky company with an uncertain future and its stock was cheap.
So, just about any long term "buy and hold" type made a lot of money relative to how much they risked. You need lots of patience to do it (wait 14 years). Fund managers who hold Apple stock are not ever going to hold a company that long. They trade for a living. So, it would be near impossible to make that kind of money today with Apple stock hovering in the $400-$500 share range.
Remember too, its real hard to make a lot of money on any investment when you pay too much or can not pick up an asset at a big discount. Those opportunities are rare. With rising interest rates, a 3% dividend is "no great shakes" either. So, even with I-Watch or whatever, Apple's
glory days are probably over. Its a mature tech. company now in the post-Steve Jobs era. No more magic, as they say.
One big reason not to expect to make as much on Apple stock as in the past: The stock is still pricy and Steve Jobs is gone. Therefore, Apple is a mature (staid) tech company with less potential to surprise or WOW investors, even considering brand loyalty.