Apple Inc. (NASDAQ:AAPL)’s shares have been mired in a downfall, falling from a high of $705 to barely piercing the $400 mark again. The question many investors are asking: is Apple a buy?
Currently valued at 10 times earnings, the stock appears cheap. It looks even better when you back out the $145 per share it has in cash, giving it a valuation for current operations of 6.5. That also doesn’t include Apple Inc. (NASDAQ:AAPL)’s brand, second only behind The Coca-Cola Company (NYSE:KO) on the world’s most valuable brand list, or its property, plant, and equipment.
From a valuation standpoint, it appears very cheap.
Have you read all the bearish scenarios for Apple Inc. (NASDAQ:AAPL)? All the diminished expectations? I certainly have. I don’t believe bearish sentiment has reached an all-time high yet, but it’s on its way there. The point being, at some point expectations become so diminished that an upside surprise has the ability to propel the stock upward rapidly.
Apple Inc. (NASDAQ:AAPL)’s yield of near 3% makes it a buy for many dividend investors, and as the yield increases while the stock drops, it puts a floor in place for the company.
Is no one listening to CEO, Tim Cook, who has made repeated references to the new, game-changing products Apple Inc. (NASDAQ:AAPL) has in its pipeline? Is the Street really so profoundly negative on the company that it discounts such statements entirely?
I grant you that Apple is scrutinized far more than other companies. Management put an incognito ad out for a plastics engineer in the help wanted section and it got traced back to the company. The Internet rushes to evaluate any leak that might spring, making it very very difficult for Apple to keep things a secret. But, despite this, it’s not beyond the realm of possibility that Apple Inc. (NASDAQ:AAPL) has a game-changer holstered and ready to be released in the, hopefully, not-so-distant future. I’m not ready to discount Tim Cook completely.
Though admittedly behind the curve, this offering does help strengthen the Apple ecosystem in its fight against streaming services like Pandora Media Inc (NYSE:P) and Spotify, which continue to eat away at iTunes dominance in music.
Interestingly, Pandora Media Inc (NYSE:P) has increased in value since the announcement, and while I feel Apple should open up all aspects of iTunes to Android and Windows phones, rather than keeping it within Apple’s walls, I am hopeful of the direction the company is taking in releasing the product.