Is Apple Delicious At $500?
by KRV
As a follow-up to some of the comments on my past two articles and also, based on a reader's specific request, this article is about when to buy AAPL. My first article on Apple (AAPL) focused on the larger business eco-system that Apple is facing recently and questioned the possibility of even a modest margin compression due to various factors, including Samsung's supplies to Apple becoming costlier, which is now a reality. The second article talked about how the recent inflection point about Samsung Galaxy SIII's sales leadership might play out within Apple's corporate discussions. There have been many good articles (both for and against) investing at sub-$600 price points in Apple. The concerns I voiced in my articles were the reasons I sold Apple in the mid $600's. Now, with Apple at least $100 cheaper than my exit point, I wanted to review if I should consider entry into this amazing company's stock again. With all this as context, let us examine two methods by which a possibly entry point can be established now for Apple. I will spare you the details of my Excel model but for those interested, I applied a probability-driven earnings growth model with some concession for projection error (in other words, added a 'margin of safety'). The salient results are presented under Method 1. In the second method, which is qualitative, I simply outline possible examples of change that potential investors should look out for, which would bode well for Apple in the future. read more »
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