The handwriting has been on the wall for a couple of years. You know what they say, right? What goes up, must come down. Numbers don’t lie. What goes around, comes around. And, my favorite, a sucker is born every minute.
Apple’s AAPL, the stock once the darling of Wall Street, has succumbed to various and sundry laws about big numbers, perception vs. reality, and myopic investors who chase risky dreams instead of investing their money into well run companies.
The tale of the tape is obvious. AAPL is down and high flying investors are fleeing the stock and taking their millions or billions or whatever they have left over and putting the money somewhere else besides our favorite Cupertino Mac maker.
Over the past five years AAPL has been good to investors, but Wall Street is about ‘what have you done for me lately’ and the stock– behaving pretty much like Apple’s Mac and iPhone and iPad– has hit a wall of sorts.
The problem seems to be with perception vs. reality. Wall Street investors want a risky growth stock more than a tried and true moneymaker stock. Apple buys back billions of dollars of its own stock, then issues billions of dollars in dividends, and what do investors do?
Is there even a “Thank you?” for all the riches Apple has given to greedy shareholders? No, it’s merely another episode of “Wham, bam, thank you, Ma’am” and investors are off to a booty call somewhere else on the exchange.
Apple’s stock has languished of late because the company has stopped growing. For now. AAPL likely will languish until growth begins anew or common sense returns to investors, which will occur just after peace in the Middle East.
It could happen.
News this week is of major investors leaving AAPL, which, oddly enough, caused the stop to jump a bit, but not enough for anyone important or rich to pay attention.
Or, did they?
A couple of major investors opened up rather large positions in AAPL recently, obviously sensing a bargain. After all, what’s wrong with a technology gadget maker with a billion customers who makes more money than many Western European countries and could buy a couple of them and still have cash leftover?
Remember this fact. For every investor that flees AAPL and its much admired 10.4 price to earnings ratio, there is a buyer. Someone somewhere thinks AAPL has a future and may thank those fools who drove the stock into the ditch. That’s where the bargains are.
Take a look at GOOGL, AMZN, and MSFT. All have wonderful five year gains, but only Apple is headed downward, and only Apple has a stellar P/E ratio; fully one third of Microsoft and Google but 1/40th of Amazon.
AAPL has become the Rodney Dangerfield of stocks.