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Mean Reversion: Why Apple Should See a Dramatic Rally

February 5, 2013 (6:00 pm)

In our January 16 post rebutting Pacific Crest Securities analysis of Apple’s likely share price range for 2013, we explained that the average quarterly volatility for shares of Apple over the past few years has been roughly 3.3x the trailing twelve month earnings. With current LTM earnings of $44.10, this quarter’s price action should range $146.80 from low to high. Based on the low price of $435 this quarter, this range implies a high price of $582 during the current quarter. (more…)

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Pacific Crest Securities Blew It

January 16, 2013 (6:00 pm)

Can we agree on something? Pacific Crest Securities blew it this morning and have forever discredited themselves. They recommended to their clients that they sell Apple at the absolute low. They were shaken to the “core” (forgive the pun) and downgraded shares of Apple on a faulty assumption. In the short-term, Apple ≠ AAPL. But in the long run, they are one and the same. Technical’s may run the near-term price action, but fundamentals eventually take over. (more…)

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Has Apple Hit a Wall? (by Bhagwan Motwani)

January 15, 2012 (11:00 am)

Will Apple ever see $700 again? Has it hit the wall because it ran into the Law of Large Numbers? Is Apple yet another victim of history repeating itself?

Within the last dozen years, this history has had Microsoft see its market capitalization decline from $642 billion in 2000 to $226 billion today. Cisco reached its market capitalization peak of $557 billion in 2000, only to fall to $108 billion today. Does more pain await Apple as its market cap drops from its high of $661 billion in September of 2012 to $489 billion today? (more…)

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Investing in Apple: A Two-Story Stock (by Fernando Olivares)

January 10, 2012 (7:45 pm)

Apple bulls have been scratching their heads and licking their wounds ever since the stock finally broke the $700 barrier in mid-September. This extremely bullish price action (a very impressive 71% rally YTD at that point) signaled a top in the stock. We’ve been in a very severe downtrend ever since.

What we need to take from these actions are two things:

  1. The stock is not the company, and
  2. The company is not the stock.

(more…)

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