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This has been a mixed year so far for Apple Inc. (AAPL). The company has been posting record profits and revenues while growing the iPhone, iPad and Mac businesses. The iPad, which has been on the market for less than a year and a half, has quickly become the next big "post-PC" product while leaving all competition in the dust. But there have also been a surprising number of missteps for a company that prides itself on a polished image and smooth operations.

1. As big of a success as the iPad has been, it has not been without its share of issues. The most notable of these has been the constricted supply of components, which has led to a shortage of iPad 2s. The demand is certainly there, but so far Apple has not been able to ramp up production to meet that demand. This failure is giving competitors in the tablet market a glimpse of hope as they try to catch the market-leading iPad.

Many potential customers (myself included) had their hopes set on a retina display rumored to be a feature of the iPad 2. The lack of a retina display could be labeled more of a disappointment than a failure, but it was a big disappointment. Whether it was supply issues or technical issues that kept this from happening is unknown, but look for a retina display on the next iteration of the iPad.

2. The iPhone has had a hugely successful year by just about any measure, but as we sit here in late May, it appears that no new iPhone is set to be released in June. Instead, it appears that the next iPhone is delayed until September. Whether this was the plan all along, or a necessary delay caused by component shortages or technical problems, we may never know. It also remains to be seen what new features the next iPhone will have. Will it be a major overhaul (iPhone 5) or a refresh of the current model (iPhone 4)?

With this delayed launch, it will be interesting to see how iPhone sales come in over the next two quarters. I imagine there could be a drop-off in sales as the iPhone 4 reaches its first birthday and customers hold off their purchases until September.

3. When news first broke that iPhones were tracking users' locations and keeping all this data unencrypted, my first reaction was that this was going to be a big, big deal. To my surprise, this issue has not gotten the attention or outrage that I had anticipated -- but even with the somewhat muted response, it has left another bruise on Apple. Five or 10 years ago this would have been a much bigger deal, but as a society we seem to be accepting the fact that using technology requires trading in some of our privacy. We know that the government can track our every movement, listen to our phone calls and read our emails, but companies should not be doing this. Apple needs to learn from this mistake if it hopes to retain the trust and confidence of loyal fans.

4. The next issue is something entirely outside of Apple's responsibility, but since it affects investors I am including it here. Last week Fortune reported on Apple's stock price manipulation. The funny action in Apple's stock price is something that I had been noticing for some time, but as a long-term investor it didn't much concern me. Still, I was very happy to see a major financial publication reporting on this issue and I look forward to seeing if anything comes of it. Seeing a stock "pinned" at a round number (i.e. $350) is not so unusual due to the nature of options contracts, but the pinning action in Apple's stock had become so constant and predictable that I think there may have been something fishy going on. I don't think this issue is of much concern to long-term investors, but whenever a market is being manipulated it raises some red flags.

Why It's Time to Buy Apple

Even with all these issues, delays, controversies and concerns, Apple remains on solid ground and the stock price remains undervalued. The earnings growth has been nothing less than spectacular and, even with the law of large numbers threatening, we should still see good growth over the coming years as Apple continues to take market share across all regions of the globe.

Asymco recently published data that shows that Apple has only 7% of the global handset market. Needless to say, there is plenty of room to grow in this space. What was also interesting, if not astounding, from the report is that, with this 7% of handsets sold, Apple has been able to reap 57% of the profits in the industry. The original deal that Apple made with AT&T (T) was hugely profitable and set the stage for deals with all the other carriers. The success of the iPhone has been truly amazing, and we're still in the early stages of worldwide smart phone adoption. Expect the success of the iPhone to continue for years to come and expect the stock price to reflect this success.

As I've written before, shares of Apple are grossly undervalued. If we subtract the cash on the balance sheet, we see that Apple is trading at only about 12 times earnings. For a company growing earnings as quickly as Apple (over 90% earnings growth last quarter), this low P/E is unwarranted. Yes, Apple is a big company and is unlikely to ever have a high P/E again, but 12 times earnings is far too low. Something that is often overlooked is the stickiness of Apple's products. It is easy to switch from another phone or computer to an Apple product. It is very hard to go the other way, meaning that earnings growth is likely to continue for some time to come.

The blemishes have been many, but the result of this series of negative events is a stock price that has been held in check. If things had all gone smoothly, shares of Apple might already be trading over $400. As it stands now, these short term issues have depressed the stock price, dismaying many investors but providing a great buying opportunity for new money. My strategy remains the same: Add to my position in Apple on any major dips or when the valuation is excessively low. Shares are dipping, valuation is now excessively low. It's time to buy.

Source: Apple's Many Failures and Why It's Time to Buy