AAPL: Buy Now!

  • Posted: 01 April 2010 01:51 PM

    This is not my occasional probing question. It’s an emphatic statement!

    Since January and the release of Apple’s 1st fiscal quarter results I’ve seen nothing but upside for the share. In early March I issued a $384 12-month price target for AAPL. This was without factoring heavy iPad contributions to revenue and earnings growth in FY 2010.

    My question now is: How many millions of iPad units will Apple ship this fiscal year and this calendar year?

    My 12-month price target may prove to be conservative. The iPad may push Apple’s revenue for the fiscal year past the $60 billion milestone and contribute as much as $1.50 to eps this fiscal year alone, constituent revenue sources considered. Not bad for a product that debuts on Saturday.

         
  • Posted: 01 April 2010 02:42 PM #1

    We’re seeing an amazing convergence of events for Apple not the least of which is Saturday’s release of the iPad. From a rebound in PC sales (and Apple continuing to outperform the industry), a material increase in content available through iTunes and the release of the iPad, there are strong revenue undercurrents to support a substantial rise in the share price.

    The March quarter’s results should be more than impressive from a financial standpoint and more than enough to sustain a bounce higher in the share price from iPad sales.

         
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    Posted: 01 April 2010 07:18 PM #2

    IIRC, every time you posted this call, AAPL pullback for a couple of days to weeks.  Would history repeats itself?

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    Posted: 01 April 2010 09:43 PM #3

    I have gone into a much more conservative position in the past two days.  IMHO AAPL is due to a pull back to 227 - 230 (at least) sometime before or after earnings.  In the long term almost any point would be a good entry because the earnings are going to rise at or above market expectations.  But sell offs will happen and I think we are due for at least a small one soon.

         
  • Posted: 01 April 2010 10:19 PM #4

    Pulling the buy trigger now takes a lot of nerve. Apple is overbought and has been for some time. Problem is even if we get a pullback where do you get back in? There is so much money that will not buy an up market especially a rocket like aapl.  if you are not a trader but an investor does it matter? Where, as Wayne Gretzky puts it, will the puck be. In Sept or Jan or 2012?.  If you are looking at fundamentals and not in Apple stock where the heck is your money? Buy and walk away for a while and forget the day to day movements…. This is a stock you can tell your grandchildren about just as some have been told about Coca Cola and IBM. DT’s forecast is reasonable. There are fewer and fewer public companies that are as sound as Apple. There is too much money chasing too few rational investments. It truly is an opportunity of a lifetime. I am all in and have been for some time and although I jigger my positions a bit for tax reasons. I have not only made an incredible amount of money but have taken an incredible amount off the table for good. I never advise anyone but the purchase Apple LEAPS (AND THEN LEAVE THEM ALONE) or outright stock not margined is the best deal I have ever imagined…

         
  • Posted: 01 April 2010 11:26 PM #5

    Bryanyc - 02 April 2010 12:43 AM

    I have gone into a much more conservative position in the past two days.  IMHO AAPL is due to a pull back to 227 - 230 (at least) sometime before or after earnings.  In the long term almost any point would be a good entry because the earnings are going to rise at or above market expectations.  But sell offs will happen and I think we are due for at least a small one soon.

    Sell offs will happen and the move higher won’t necessarily be in a straight line. But the p/e multiple is half the rate of last quarter’s earnings growth and 2nd fiscal quarter results look to be stellar. My call is to get in before results are released and the iPad adds to this quarter’s earnings.

         
  • Posted: 01 April 2010 11:28 PM #6

    Mace - 01 April 2010 10:18 PM

    IIRC, every time you posted this call, AAPL pullback for a couple of days to weeks.  Would history repeats itself?

    I’ve been watching this stock for over 20 years. There have been pullbacks and their have been bear cycles. A pullback could come next week. After that?

    I see my 12-month target of $384 per share as reasonable. I can’t forecast momentary pullbacks, but I’m confident we’ll see $300 per share before the end of the calendar year.

         
  • Posted: 01 April 2010 11:31 PM #7

    SNIPUS - 02 April 2010 01:19 AM

    DT’s forecast is reasonable. There are fewer and fewer public companies that are as sound as Apple. There is too much money chasing too few rational investments. It truly is an opportunity of a lifetime. I am all in and have been for some time and although I jigger my positions a bit for tax reasons. I have not only made an incredible amount of money but have taken an incredible amount off the table for good. I never advise anyone but the purchase Apple LEAPS (AND THEN LEAVE THEM ALONE) or outright stock not margined is the best deal I have ever imagined…

    There are fewer and fewer big caps let alone mega caps that offer the return Apple will provide over the next 24 to 36 months. A $200+ billion market cap company that may double its value in 24 months are not often found.

         
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    Posted: 01 April 2010 11:46 PM #8

    Bought this stock way before the split, mainly because I loved my Power Mac 7200, despite being ostracized by my PC friends, etc. Apple’s innovative products, classy designs and their sheer guts to go against the grain secured my confidence in this company. From the iMac, the iPod, iPhone and now the iPad, I am not selling anytime soon. Yes, will continue to go longterm amidst pullbacks, etc. Steve Jobs for president!

         
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    Posted: 02 April 2010 12:00 AM #9

    SNIPUS - So I am a long (and not a trader) but I do have ~25% cash now, and intend to deploy most of it into AAPL LEAPs. If you had some cash now, would you wait a while for a pullback, or go all in as soon as possible (Monday at this point)?

    I’ve sold a bit in the recent run-up, expecting an initial disappointment from iPad sales to last 1-2 months, possibly with a further sellof come earnings, and then a rampup when people start to realize the iPad is hot product. However, with the recent slew of positive reviews, it seems the media is “getting” the iPad much sooner than I thought they would. I have a dilemma in that I don’t want to miss the train if post-launch numbers and reaction are great, and AAPL appreciates more.

    Of course, there’s also always a possibility of a general market selloff and a secular bear market (which I don’t believe but many people preach), in which case AAPL would temporarily follow.

         
  • Posted: 02 April 2010 01:48 AM #10

    Roman - 02 April 2010 03:00 AM

    SNIPUS - So I am a long (and not a trader) but I do have ~25% cash now, and intend to deploy most of it into AAPL LEAPs. If you had some cash now, would you wait a while for a pullback, or go all in as soon as possible (Monday at this point)?
    /quote]

    Look at it this way Roman. I am all in (mostly LEAPS and some Oct 230’s) I cannot say if you should go all in Monday but I am all in Monday and while I realize it could drop back to $222 I am staying all in and not taking protection. So my answer would be yes except that even if Apple corrects 5 to 10 percent I DO NOT CARE. I cannot predict short term moves and refuse to get emotionally involved because I could be (on paper) poorer tomorrow than i am today; cause I know I will be richer at the end of the year than I am today, yesterday and tomorrow. It is emotion that kills most of us financially and my experience is that the more uncomfortable I make myself the better I make out!! Weird huh? So big picture I plan usually over a weekend and then execute and ignore the minutiae of govt analytics, chart formations and ‘’ experts’’ on CNBC. I always buy too high and sell too low btw. I only deviate if something FUNDAMENTAL changes. I must say the swings in my account over the past 6 years are stomach wrenching and scary. i am basically a lousy trader and bad timer but fortunately Apple’s success bails me out

         
  • Posted: 02 April 2010 02:10 AM #11

    I’m looking to reload a little more next week.  I probably will do Jan. 2012 LEAPS this time. 

    Of course, THIS time it could be “Sell the rumor, Buy the news” but who knows?  I stayed away this week to see if the predictable dip happens next week. 

    Long term, this stock is GOING HIGHER.  And like others have pointed out here, it doesn’t matter much if your timing is $10-$15 off, because the upside is 10 times that.  Trying to pick the bottom on AAPL going forward is more likely to cost you money than make you money.

         
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    Posted: 02 April 2010 02:12 AM #12

    Right now we have what could simplistically be called “half” the equation solved—the critics basically love the iPad.

    The other half, the far more important half which really matters, is consumer uptake.

    And let’s face it, in a prerelease stage, it’s a total unknown.  Apple’s senior staff must’ve gone through quite a gutwrenching round of “how many of these do we build?” 

    iPad’s success is assured.  It’s just a question of whether it sells in MacBook-type volumes or iPhone-type volumes, and that will have an impact on AAPL’s price despite the iPad, IMHO, being an almost totally additive product for Apple.  How long will it take for the fourth growth engine to get up to full boost?

    That said, I agree this is as good a time to buy in with “expendable” investment money as any.  Too bad there’s so many external unknowns these days, but hey, that’s the stock market for ya.

    [ Edited: 02 April 2010 02:14 AM by Mav ]

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  • Posted: 02 April 2010 02:15 AM #13

    Mercel - 02 April 2010 05:10 AM

    Trying to pick the bottom on AAPL going forward is more likely to cost you money than make you money.

    Agreed.  grin

         
  • Posted: 02 April 2010 02:33 AM #14

    Mav - 02 April 2010 05:12 AM

    iPad’s success is assured.  It’s just a question of whether it sells in MacBook-type volumes or iPhone-type volumes, and that will have an impact on AAPL’s price despite the iPad, IMHO, being an almost totally additive product for Apple.  How long will it take for the fourth growth engine to get up to full boost?

    Good questions.  grin

    The way I see it, the iPad adds to the strong growth currently in both the Mac line and the iPhone. All sales are a plus. But one benefit not often mentioned is what the iPad brings to the iPhone OS eco-system in terms of developer and content provider interest. In choosing platforms to support, the iPhone OS has the clear advantage over competitors. Developers can address the iPhone, iPod touch and the iPad markets simultaneously. No other platform provides that large and diverse of an addressable market. It’s content IMHO that drives hardware sales.

         
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    Posted: 02 April 2010 02:40 AM #15

    SNIPUS - 02 April 2010 04:48 AM

    I only deviate if something FUNDAMENTAL changes. I must say the swings in my account over the past 6 years are stomach wrenching and scary. i am basically a lousy trader and bad timer but fortunately Apple’s success bails me out

    SNIPUS - Thanks for the calm reasoning. You have a very Buffett-esque (or Graham-esque?) long-term view, which is refreshing. I am also finding out that I’m a lousy trader, and thus far - the longer the trade, the better the success. I had bought some shares at $175 before AAPL dropped off to $80, and that was hard to watch, but I stuck to it, and glad I did. I’ve turned to LEAPs quite recently, in the last half a year or so, and I’ll probably jump in sooner rather than later with the rest of my cash.

    Others on this thread, thanks for your points of view too!

    My only question is - Where is Tommo?