This Day On The Street
Continue to site
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

Can the Apple Bear Be Killed?

NEW YORK ( TheStreet) -- While we're all celebrating new highs in the Dow Jones Industrial Average, Apple (AAPL - Get Report) remains in the doldrums.

At its current value of about $430/share, it's 270 points below its October high of $700. Over a quarter of a billion dollars in value has been destroyed. Doesn't sound like much in a market whose value is approaching $20 trillion, according to the Wilshire Index.

But consider this: Since October's Apple high, the Wilshire has advanced only a little more than 1,000 points, adding about $1.2 trillion to the market's value. If Apple had just stayed where it was, that figure would be about $1.45 trillion. For every $5 in total stock market advance during the period, Apple by itself lost the market $1.

The point is that what happens to Apple does matter to the total market. Even at its present depressed level, $400 billion is nothing to sneeze at.

Writers here at are as confused as anyone else about what's going on. Rocco Pendola blames management. I'm more inclined to believe that everyone was "in" at $700 so there were no more buyers, and a rush to the exits ensued.

I personally believe Apple is just one solid press conference away from being a $500 stock, and one hit product away from being a $600 one. Mere rumors of an iPhone 5s sent the stock up 2.5% on Tuesday, TheStreet reported.

Doug Kass says Apple remains fine for trading and that he recently made a little money on it. Kass made the bear case in September, so his words here carry weight.

His earnings estimates are still below consensus, yet he's predicting nearly $42/share in 2013 earnings, implying a forward PE of just 10.1. And his bearish case sees earnings growing 10% per year. I think Kass sees Apple as fairly valued.

Intel (INTC) currently carries a PE of 10.1. Analyst estimates for its earnings this year, according to Yahoo Finance, are $1.94/share, and for next year $2.10. Which would you rather own?

Apple's business problem is basic. Its markets have moved quickly, so while the iPad is only four years old its market is fairly mature and the iPhone's market is practically ancient. Value pricing is called for in these cases, but Apple doesn't do value pricing -- it only does premium pricing. Thus, Apple has lost share and should continue to lose it.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $109.50 0.00%
FB $92.86 0.42%
GOOG $639.16 0.00%
TSLA $220.50 -2.70%
YHOO $32.37 0.00%


Chart of I:DJI
DOW 17,050.75 +138.46 0.82%
S&P 500 2,013.43 +15.91 0.80%
NASDAQ 4,810.7880 +19.6360 0.41%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs