Everyone knows that Apple (AAPL) stock has taken a beating for the past six months. The sentiment towards Apple's stock has been negative ever since Tim Cook and company began selling the iPhone 5, but there are reasons to believe this sentiment is changing.
Since the high of $705, every news publication regarding Apple has sent the stock lower. Apple sold an amazing 5 million iPhone 5s in the first weekend. The perception was that this was an underachieving amount. The word on the street was that analysts were looking for a number closer to 8 million. Subsequently, the stock dropped about 5% the following week. This was the start of a brutal stretch of 5 months that saw Apple drop to a low of $435.
Apple had their new maps app ripped to shreds by the press. This was deservedly so, but the press would not stop there. The iPad mini announcement was torched. October earnings were blasted. Article after article berated Apple about "margins compression", cheaper iPhones, slowing growth, gap fills and so on. Any news was bad news. It was a never-ending stream of negative press.
Last week, hedge fund manager Steve Einhorn sued Apple for its misuse of its $137 billion in excess cash. A month ago this would have sent the stock spiraling downward, but the stock has responded positively. This weekend there were reports of an iWatch, which undoubtedly would have been labeled a terrible idea and margin killer a few weeks ago. The stock was once again up that Monday.
Last quarter, Apple launched an entire new line-up of products. The iPads, iPhones, Macs, and Macbooks have all been refreshed recently. Stories of iWatches and iTVs continue to circulate. The company seems to be set up to deliver big for the rest of 2013.
The iTv and iWatch seem to be right around the corner. Apple closed Friday at just 3.25x its cash hoard and a PE ex-cash of just 7.49. No question this is cheap in many Investors' eyes. Some would have argued that the stock price was cheap a 705 and a PE of 16.5, but the general public percieved it as expensive and bound to fall. Perception is everything in this game and with two big news stories sending the stock higher this past week, perception might be changing for the better.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.