Apple Drops Below $500

It’s an oddly quiet day today on Wall Street. The indexes are down but not by much. The only news to catch my attention is that shares of Apple ($AAPL) briefly dropped below $500. The stock was over $700 in September. The shares now yield more than a 10-year Treasury bond. Of course, let’s keep in mind Apple’s great run. The stock was below $50 on October 13, 2005.

It’s rather stunning how quickly the market has turned against Apple. I suspect that Apple’s fall has farther to go. Going by the numbers, Apple appears to be cheap. The current consensus is that Apple will earn $57.07 per share in the fiscal year ending in September 2014. Of course, Apple missed earnings the last two reports. The one in July was particularly bad.

I had considered putting Apple on this year’s Buy List but ultimately, I didn’t want to move just yet. I’ve learned that when you use a value strategy for investing, you often get to good stocks too early. Ford is a good example. We were right that it was cheap but it took the market longer than I thought to realize that. There’s a saying on Wall Street that you often make the most money on an investment in the second or third year you own it. Apple’s earnings report is due next Wednesday.

I’m still a little puzzled by the reaction of Wells Fargo ($WFC) to its earnings report. I thought the numbers were pretty good. The stock opened lower on Friday but rallied as the day wore on. The shares opened down again today. Stay tuned for JPM’s earnings report on Wednesday. I’m expecting them to beat consensus.

Posted by on January 14th, 2013 at 11:39 am

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