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Apple Investor Amnesia Sets Up a 2013 Value

NEW YORK ( TheStreet) -- Apple (AAPL - Get Report) entered 2012 as a stock that simply couldn't rise fast enough to account for its underlying earnings growth. Investors who went missing this year may get a near-identical redo in 2013.

Interestingly, while some tech pundits say the last twelve months were a game changer for the iPhone and iPad maker and are calling for the company's eventual demise, Apple enters 2013 in a notably similar state as it did in last New Years Eve.

While Apple's shares have been a top stock market story in 2012, eclipsing a market cap of $650 billion earlier in the year, the company's most basic valuation is roughly unchanged from year-ago levels. Meanwhile, Apple is in the midst of rolling out the iPhone 5, an updated iPad and the iPad mini, in a global product launch that compares to 2011 holiday season smartphone and tablet offerings.

So what does it all mean for investors?

For one, those betting on Apple's continued earnings growth will have remarkably similar arithmetic underpinning their 2013 investing strategy.

Apple entered 2012 with a price-to-earnings ratio of 11.53 and it heads into 2013 at a PE of 11.69, a 1.4% rise over the course of the year. Still, Apple's stock is up over 25% year-to-date, even after a similar sized selloff from record highs above $700 hit in mid-September.

The key, as many investors such as David Einhorn of Greenlight Capital Management predicted, is that Apple's profits rose far faster than its stock this year.

In fiscal 2012, which ended on Sept. 29, Apple's earnings surged over 60% to $41.7 billion. In its fiscal fourth quarter, Apple's $8.2 billion in profit reflected a 24% increase from year-ago levels.

While Apple's shares have fallen sharply since it reported underwhelming earnings in October and adjusted first quarter 2013 EPS estimates from $15.49 a share to just $11.75, its new revenue forecast of $52 billion for the quarter still represents a near 20% increase.

Were one to assume Apple can grow earnings in 2013, the company's stock may have a similar trajectory to this year, when increasing profits and investor bullishness pushed the stock to multiples of between 13 times and 15 times trailing 12-month earnings, according to data from ycharts.

Apple's earnings are forecast by analysts polled by ThomsonReuters to increase roughly 17% to $48.8 billion in 2013, as revenue is estimated to surge over 22% to $191 billion, a new record.

Such a scenario might have second order implications that ripple across the tech sector, and in particular to once blue chip stocks like Dell (Hewlett Packard) and Research In Motion (RIMM), which increasingly are in the gaze of value investors and activists.

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