Why I Think Apple is a Neutral or a Sell
Disclosure: Yesterday I unloaded all of my Apple shares
With my disclosure you can guess that I think Apple is a sell. While it is a sell for me, it might be neutral for you. Though you might wonder why I sold considering that I have previously said, “Apple, Apple, Apple”. As I have said in the past I will not play pump and dump thus am plyaing with open cards.
So why have I changed my opinion on Apple? For starters I actually still like Apple the company in general. Though what I don’t like are the valuations. At 32 PE Apple is completely overvalued. Apple is saying that next year growth will be in the 18% range, thus a fair price would be 18 PE, which is half the price more or less.
The problem with Apple are its announcements yesterday. They were a joke! Many are drinking the kool-aid saying that the new Nano is a must have item. Yyyeaahhh, rriiiggghhttt. Sure the devices are interesting, but they are interesting for Microsoft who is down in the doldrums and could not hit the broad side of a barn. They are definitely not interesting for Apple. Many have said that the big thing is Steve Jobs and that should be good enough. That in itself scares me because I thought we got over that? I thought we agreed Apple could function without Steve. I want Apple to distance itself from Steve. Not because Steve is sick, or Steve is bad, or what have you. I want Apple to develop some independence from its CEO. Just like I want Microsoft to get rid of Ballmer. I want the company to survive because as a shareholder that is all I care about. I actually think Steve is quite healthy, fit and ready to run Apple.
Where I see a red flag is the fact that the devices announced yesterday are so lack lustre. It tells me one of two things; Apple has no magic gadget, or Apple does have a magic tablet but due to Steve’s sickness all development was halted. Either way you spin this it is not good for Apple the corporation. Yes Apple will continue growing, but will Apple grow to warrant a 32 PE? No. Right now Apple is missing a netbook competitor and that market is growing leaps and bounds. Nokia is entering this market and they selling a premium device that will make entrance by Apple that much harder.
Thus regardless of how you spin things the catalyst for Apple growth and 32PE is not warranted. Does this mean I will not step in and buy Apple again? No, I will once it hits 100 USD again. Until then I will just wait and enjoy my 100% return (second time in a year).