This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

4 Keys to Apple's Stock

Stocks in this article: AAPL

Good things happen if Apple can shift attention towards the software. From this perspective, everyone gets a new iPhone on June 6! The status quo has become overwhelmed in irrelevant minutia. New customers should buy an iPhone when ready and current customers should replace an iPhone when needed. Apple has gotten too big to be tied to any particular dates.

4. Time to unlock value: The elephant in the room regarding Apple stock is the historically low valuation. The majority of blogs no longer mention Apple products. Instead, they each have their own way of explaining Apple's single-digit forward P/E ratio or Apple's increasing rate of change of cash.

The company is growing at approximately 100% per year and yet the stock can't keep up. Apple executives are talking about it. The board of directors are talking about it. Steve Jobs has to be thinking about it. Nobody is happy.

It's as if Apple is making 3-point shots but the scorekeeper is taking away 3 points every time the ball goes through the net. Can Apple do anything to unlock the real value of the company? Yes. Will they do something about it? They have before.

It's unlikely Apple wants to buy back shares or issue a dividend because they love the security of their cash hoard but it is likely they will split the stock. Stock splits come and go like fads. Sometimes they are popular and other times they aren't. Google's $600 price tag made it cool to have a high stock price but it appears those days are coming to an end as the Google run has sputtered. Baidu stock had stalled until it issued a 10 for 1 split on May 12, 2010; since that time the stock has almost doubled.

In this day and age, it's important for companies to stay one step ahead of the manipulative shenanigans of the hedge funds who control up to 50% of daily volume. A split, buyback, or dividend would shake things up just enough to keep the hedgies on edge. We anticipate that Apple investor frustration among the executive team and the board of directors will be enough to force Apple to make a move. The company split its shares in 2005 and in 2000. Now seems like the right time to do it again.

At the time of publication, Schwarz was long Apple.

Jason Schwarz is an option strategist for Lone Peak Asset Management in Westlake Village, Calif. He is also the founder of the popular investment newsletter available at www.economictiming.com. Over the past few years, Schwarz has gained acclaim for his market calls on the price of oil, Bank of America, Apple, E*Trade, and his precision investing in S&P 500 option LEAPS. His book, The Alpha Hunter, is set to be released by McGraw Hill in December 2009.

3 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs