Eric Steiman's  Instablog

Apple (AAPL) has been under some pressure in the media and on the stock price.  YTD the stock is up 3%.  The anayst coverage is pretty bullish with price targets in the 500s.  So why is AAPL 50% below these targets?  It seems that many investors are harping on a lack of near term catalysts. 

Why?  From my point of few, they are very short sighted.  In fact, the iPad has only been in distribution for a little over a year.  All the major retailers have waiting lists for the newer version of the device.  The demand is there, but supply hasn't caught up yet.  Something that many of AAPLs competitors would love to be in.  Excess demand!

Not only is the device a handy "PC,"  but I've seen it being used in medicine, business presentations, schools, restaurants, and much more.  Similar to the iPod, I believe that the device is going to change the "tablet" game.  The iPod controlls a HUGE marget share, while other lesser known MP3 players receive the remaining dollars.

The iPad will do what the ipod did, and push AAPL to new historic highs!  Wait there is more?

The iPhone's been on the market for years, but its had only one mobile carrier.  It has since moved over to Verizon in January and has yet to receive the much wanted revenue.  Many Verizon customers are on 2 year plans, and as they end will switch over to the iPhone.  We can see at least a year of Verizon iPhone growth!

With the huge success of the mentioned products, the lesser known Mac, has been gaining market share over the years and is gradually becoming a PC in the home. 

Finally, I'm going to take a look at the cash on hand.  AAPL has about $65 billion.  WHAT?  Yes, they could buy out RIMM and NOK and still have $20 billion.  This number will continue to grow each quarter.  Within a year and a half, the company will have over $100 Billion!  That's an amazing number and something traders aren't looking at.  They will be the first company to reach this amazing milestone!  At current prices they have over 20% of their market cap in cash, and obviously zero debt.

By removing the cash for valuation purposes the P/E is trading well below the S&P!!!  Yet earnings are growing around 60%% year over year.  Many people have made extraordinary gains over the years and may be selling, but now should not be the time.  I see at least another year of great profits.  Until then, happy trading!

I'll leave with a known Warren Buffett quote, “Be fearful when others are greedy and greedy when others are fearful”




Disclosure: I am long AAPL.