Apple, once a market darling, has slumped in recent trading as it combats slowing top line growth rates and contracting gross margins as competitors fight for market share in categories Apple invented. This has contributed to the, so far, rapid 25% decline in share price from peak at $705 in late September.
Also contributing to the downward momentum is the notion that AAPL’s “Innovation momentum” is in secular decline because, after all how many new product categories can AAPL create and dominate? Mostly though, AAPL is a “Fiscal Cliff” stock.
Billions in pregnant capital gains in this name will be crystalized before colander year end because cap gain rates in the U.S. are going up next year no matter what happens with the fiscal cliff negotiations…. So I’ll pay less tax today rather than more tomorrow: “So sell my shares this year, thank you very much.”
OK, the short term drivers in this down trend are currently prevailing, but with a 12x trailing P/E, high top line and EPS growth rates, a 2% yield, and 20+% of the current $515 billion market cap covered with cash, we think that value buyers are taking notice and will soon start re-owning this name.
Apple (AAPL : NASDAQ : US$542.90), Net Change: 0.07, % Change: 0.01%, Volume: 18,715,328