You know, I love "buy low and sell high." It would have worked great last year, when BAC was $4.8/share, C- $24/share, etc. But, you have to understand why a stock is low. At that time, most stocks were low because of the European debt crises. It had nothing to do with the fundamentals of the company.
So now, I look at AAPL and see that the stock price is very cheap. Why is the stock cheap? Apple got lazy. Their innovation in their products disappeared. All the Iphones and Ipads were similar model after model. AAPL is not diversified. Over 50% of their profit came from on product, the Iphone.
I have the Ipod, Iphone 4s, Iphone 5, Ipad, Macbook pro retina display, etc. But you know what? A friend was looking to buy a phone. You know what I said? "Wait for the new model of the Samsung Galaxy, and see how it compares to the Iphone. I have even been checking out the Nokia Lumia, and Blackberry Z10.
In other words, the Iphone has some major competition. And because they decided to maintain price and margin, they left out features and innovation out of the Iphone. That might have worked in the beginning, when they started the smartphone revolution because there wasn't any competition. But now, AAPL, your reputation can only take you so far. It means that a customer will definitely check the Iphone out, but might not pull the trigger until they compare it to the competition. And if the Iphone doesn't match up, and is more expensive, etc. then there goes the sale.
How does AAPL come back from this? AAPL doesn't come back by issuing preferred stock... or increasing their dividend to 5% or even 10%. APPL comes back by working on their products, especially the Iphone! Add more features, update the design, set it apart from the competition. It is a balancing act here however. Because, if you add too many features, then you have to lower the margin to keep the Iphone from being too expensive. If you add all the features and raise the price to maintain the margin, then sales will suffer. It is hard for me to see how Apple can keep the margin and offer the next great phone, with features and innovation.
The alternative is to offer the Iphone at different price points. The lowest price Iphone having the least features, and the highest price Iphone having the most features. However, we saw how the Ipad Mini cannibalized the bigger Ipads. If you maintain the profit margin on the cheaper phones though, that shouldn't be an issue. This would work especially well in emerging markets, where customers have to pay the actual price.
In addition, Apple can invest in diversity. It could release different products such as the Iwatch... Or, a streaming radio service. It could even add it's operating system in cars. The list goes on and on.
I am an investor in AAPL, but I really don't think that a higher dividend, stock split, preffered shares, etc. are long term solutions. Any gains in the stock price will be short lived. All the people like Einhorn asking for that are just trying to make a quick profit.
In conclusion, I don't think you can truly say that a stock is cheap enough with low downside potential, so "I'm going to buy it!" I think that you have to look at the fundamentals of the company. Because as we all know, no matter how cheap a stock is, it can go all the way to 0, or close to it. Remember the price of NOK and BBRY stock some years ago? I rest my case.
I rate this stock as neutral/hold. I will truly be bullish on the stock when I see the Iphone offered at several price points. When I see AAPL diversifying their products. If AAPL does some of the things I mentioned, and probably some great things I forgot to mention, then I would rate this stock as a BUY, with a price target of $700... We haven't seen that price target in a while.... However, if AAPL continues to operate in the mentality of "business as usual," we are going to continue to do the exact same thing we have been doing for years, than I would give the stock a "sell" rating.
Since I can't predict the future, and see what direction the company will go in, I can't be positive or negative on the stock. I don't know how all of these "professional" analysts can be so positive or negative on the stock, when so much is left to be seen. I guess they are psychic or quacks. You decide which one it is...
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AAPL over the next 72 hours.