Sunday, September 23, 2007

Festival of Stocks #55 - Apple, Inc. Edition: Buy, Sell or Hold?

Welcome to the Apple, Inc. (AAPL) Edition of the Festival of Stocks. This special edition is focused entirely on Apple, Inc., the company that gave us the Mac, iPod and iPhone. Before proceeding, I would like to thank George at Fat Pitch Financials for giving me the opportunity to host this venerable Festival a second time and for allowing a special single stock edition.

The return of Steve Jobs in 1997 has brought about an upswing in Apple's fortunes. Since Mr. Jobs' return, Apple has introduced the iMac, iPod, iTunes and most recently the iPhone. The iPod and iTunes has been the main driver of Apple's growth in recent years. The combination of the iPod with iTunes has been a magnificent business innovation by Apple. Neither were new technology, but Apple combined the two in a way that made recording music downloads easy and legal to do. In the past four years, an investment in Apple, Inc. has returned 201% (2004), 123% (2005), 18% (2006), and 69% (2007 YTD). And since January 2, 2003, an investment in AAPL has returned about 2000%.

So what should an investor do now? We have four submissions this week that recommend either Buy, Sell and Hold.

Buy Side

AAPL: I Pare Apple Arguments and Give the Edge to the Bulls is submittted by Bill Trent at Stock Market Beat. "Few stocks boil the blood of both bull and bear as much as Apple (AAPL), and for good reason. The company, richly valued though it is, has come out with more cool products than the rest of the tech industry combined. That helps excite the bulls, and as for the bears, there’s a good chance many of them are jealous for having missed out on the stock’s run. They have sour grapes they hope will someday be pressed into wine... If the company can grow at even half the current rate over the next five years, investors are likely to be well compensated for the added risk."

Sell Side

Time To Sell Apple? is posted by Babak at Trader's Narrative. "I don’t think it is an automatic short here since it could very well go into a protracted range and work out its overbought condition. But if you’re long, I’d be very careful here."

Glamorous Apple is written by George at Fat Pitch Financials. "You’d be hard pressed find someone that has negative feelings towards Apple. However, Apple’s stock is just too loved. It does not provide any real margin of safety. It’s fun to keep up with the lastest developments at Apple, but I’m leaving the following of this stock’s price to the traders."


Stock Revisited - Apple Inc (NASDAQ:AAPL) is offered by Average Joe at Investment Jungle. "At the current price of $138.41, Mr. Market is demanding a premium of 15.05%. Now, considering that I have erred on the side of caution with both my growth rate and PE, 15% does not seem so far off...Rule #1 methodology is fairly strict. It looks for consistency over a 10 year period which Apple just does not deliver. Apple is more of a momentum stock and it has definitely been on a sweet run over the last couple of years. "

Reader Opinions

So there you have it. One buy, two sell and one hold recommendation. Who do you think is right? What's your opinion of Apple, Inc. stock? Let us know what you think in the poll below:

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC


George said...

Thank you for hosting this week's Festival of Stocks. I think the single stock edition is a great idea. You did a great job pulling it off.

Dan said...

Hey thanks for hosting! I just joined IBN and can't wait to participate. What a timely piece as I've decided to buy this morning. More as a momentum play than anything else, but who knows maybe longer.

Super Saver said...


Welcome to the IBN and good luck on your purchase of AAPL. You've done well so far this week.

Turley M Muller said...

Apple is for not cheap, but it does have a multitude of things working for them. Euphoria is priced in, and if anyone would ever get really negative on the stock I might be able to buy some shares.

I wrote about the Mac increasing share via running windows