Since reaching $700 a share in September 2012, Apple (AAPL) began its descent. Apple officially reached a “correction” after trading at around $627, 10% below its all-time high. Are Apple shares a classic “buy on the rumor, sell on the fact” situation, driven higher on anticipation of the iPhone 5?
The Maps fiasco could also be a reason sentiment shifted to the downside. Supply constraints for the new device may also be a factor. Analysts forecast higher sales without considering sales would be limited by availability during the quarter.
Price chart of Apple, 1 month period:
Even though there was talk that Apple will be the first $1 trillion company by market capitalization, Apple still has a reasonable P/E. Apple’s P/E ratio is around 14.5, nearly the same as that of Microsoft (MSFT). Kapitall.com calculates its POP (Price of Profit) to be just 12, compared to 10 for Microsoft. Google’s (GOOG) P/E ratio is 22, whilst Amazon.com (AMZN) has a P/E of 300.
Talk that Apple peaked remains premature. Even if the iPhone 5 and 3rd generation iPad is at a peak, strong sales are a challenge against this bearish call. Still, the stock market is a voting machine, and Apple needs to find new ways to grow. Rumors for an iPad “mini” would help Apple remain competitive in the tablet space. Competitors are selling 7-inch tablet devices at a fraction of the price of an iPad.
Business Section: Investing Ideas
All of the companies mentioned should be added to your watch list. The companies are:
2. Apple Inc. (AAPL, Earnings, Analysts, Financials): Designs, manufactures, and markets personal computers, mobile communication and media devices, and portable digital music players, as well as sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide. Market cap at $595.03B, most recent closing price at $634.76.
4. Netflix, Inc. (NFLX, Earnings, Analysts, Financials): Provides subscription based Internet services for TV shows and movies in the United States and internationally. Market cap at $3.6B, most recent closing price at $64.76.
5. Microsoft Corporation (MSFT, Earnings, Analysts, Financials): Develops, licenses, and supports a range of software products and services for various computing devices worldwide. Market cap at $248.8B, most recent closing price at $29.51.
6. Sony Corporation (SNE, Earnings, Analysts, Financials): Designs, develops, manufactures, and sells electronic equipment, instruments, and devices for consumer, professional, and industrial markets worldwide. Market cap at $11.74B, most recent closing price at $11.69.
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Analyze These Ideas: Getting Started
- Read descriptions for all companies mentioned
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Dig Deeper: Access Company Snapshots, Charts, Filings
- Amazon.com Inc. (AMZN, Chart, Download SEC Filings)
- Apple Inc. (AAPL, Chart, Download SEC Filings)
- Google Inc. (GOOG, Chart, Download SEC Filings)
- Netflix, Inc. (NFLX, Chart, Download SEC Filings)
- Microsoft Corporation (MSFT, Chart, Download SEC Filings)
- Sony Corporation (SNE, Chart, Download SEC Filings)
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