It is a long weekend for the Labor Day. So I will be brief.
Everyone knows Apple and I have written about Apple many times here. It used to be the Street darling but has lost its fame for a couple of years due to lack of innovation since the death of Jobs. This is a $600 billion gigantic company that controls almost a third of the smart phone market as well as 35% market shares of PC and tablets. As such, Apple is extremely profitable with a 20%+ profit margin. It is generating almost $4-5 billion in profits every month. But it is trading at a PE of 12, a huge discount for such a profitable company. After a relentless sale-off for about a year, Apple appears to have bottomed around low 90s and has recently broken out its downtrend line. While its technical looks quite strong at the moment, the recent two events made it even more convincing that Apple has bottomed: Apple had a "terrible" earnings report a couple of weeks ago with sales and earnings per share both declined by 15% and 23% respectively but its shares shot up almost 7% on the bad news. Then this week Apple was fined by the EU for $15 billion for its accounting practices in Europe but again, Apple's share did not budge for such a hefty fine (2.6% of Apple's market value). When bad news could not push down a stock anymore, it usually means those who want to sell have already sold and no one else left to sell anymore, a typical bottoming phenomenon. I think Apple is a good buy at this price. But be aware, technically Apple may decline in the near team towards $100 but I doubt it will be more than that. Buying Apple at its weakness will be a great gift for long term!
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