Apple's Stock Is a 'Buy' but Wait for a Dip, Cramer Says

NEW YORK ( TheStreet) -- Jim Cramer argues that Apple's ( AAPL) stock, already up 31% this year, will extend gains, but recommends that investors wait for a pullback to buy more.

Apple is holding an event today to launch its new version of the iPad at San Francisco's Yerba Buena Center. The stock of the Cupertino, Calif.-based company has been on a roll -- increasing more this year than it did for all of 2011 -- which makes it hard to determine when to add to a stake.

The week after the previous iPad launch, the shares traded down before rebounding swiftly three months later. BMO Capital Markets noted that Apple's stock was down 1% on average one week after the event, but were then up 1% a month after the launch. Three months later, Apple shares on average were 13% higher.

While Apple pulled back a bit earlier this week, Cramer says the stock could see a hiccup in the price, and he recommends waiting for a dip to buy. His Charitable Trust owns 200 shares of the tech giant as a core holding, and he notes "we are not trading it, we're owning it."

Cramer says the stock is underowned by institutional investors, especially given the opportunity he sees in this high-quality name.

"People still don't recognize that the earnings power is in excess of the average stock and yet the multiple is not," he says. The valuation is certainly attractive, trading at 12 times next year's earnings. That compares to a five-year average of 23 times.

"I care about earnings, and the earnings estimates are too low, earnings power is too great, and the multiple is too low," Cramer says. That said, he will wait for the next dip to buy because "Apple's own worst enemy is how much the stock is up."

-- Written by Lindsey Bell in New York.

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