Who'd Be Nuts Enough to Sell Apple?: Opinion

NEW YORK ( TheStreet) -- When I want a good laugh I watch the cult movie "The Gods Must Be Crazy." When I look at the price action on Apple ( AAPL) recently I think "The Market Must Be Crazy."

What the heck is happening here? I can't see any reason to sell this stock and I see every reason to have it on your watchlists and be prepared to hit the buy button at any moment.

If you have any investing rule to live by it should be to find companies that have double digit projections for growth in sales and earnings and buy them when their P/E is lower than the markets.

Look at what has been happening to the price of Apple when compared to the price of the Value Line Index (my market proxy) over the past 2 1/2 months. While the Value Like Index has been flat, Apple fell 20%:

Let's look at all the reasons why Apple is a bargain.

Apple, together with subsidiaries, designs, manufactures, and markets mobile communication and media devices, personal computers, and portable digital music players; and sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide. Its products and services include iPhone, iPad, Mac, iPod, Apple TV, the iOS and Mac OS X operating systems, iCloud, and various accessory and support offerings, as well as a range of consumer and professional software applications.

The company sells its products and services to consumers, small and mid-sized business, education, enterprise, and government customers through its retail stores, online stores, and direct sales force, as well as through third-party cellular network carriers, wholesalers, retailers, and value-added resellers. In addition, it offers various third-party iPhone, iPad, Mac, and iPod compatible products, including application software, printers, storage devices, speakers, headphones, and other accessories and peripherals, through its online and retail stores; and digital content and applications through the iTunes Store, App Store, iBookstore, and Mac App Store. Apple was founded in 1976 and is headquartered in Cupertino, California. (Yahoo Finance profile)

Factors to Consider (Technical factors provided by Barchart): When there are technical sell signals in stocks that are fundamentally sound, that can be a good time to put them on your watchlist and be prepared to buy them at a discount. There is an 88% Barchart technical sell signal and a Trend Spotter sell signal. The stock is trading below its 20-, 50- and 100-day moving averages. The price is at a 22.78% discount to its one year high and the Relative Strength Index is a very low 27.33%. The price was recently $544.65 which is below its 50-day moving average of $645.25.

Fundamental factors: This is one of the most widely followed companies on Wall Street where 47 brokerage firms have assigned 56 analysts to monitor the numbers. They project revenue to be up 23.60% this year and another 15.10% next year. Earnings are estimated to be up 13.60% this year, an additional 17.10% next year and continue to increase at an annual rate of 22.03% for the next five years.

The company has an A++ financial strength rating and is selling at a P/E ratio of 12.64 in a market where the average stock is selling at a 15.20 P/E. The 1.90% dividend is only 20% of forecast earnings. Apple recently won a landmark patent infringement case against market leader Samsung and Apple is selling everything it can produce. Sales in the growing China market are up 20%. The stock had a 100 Price Growth Persistence rating.

Investor interest is high and analysts have released 22 strong buy, 28 buy, four hold and only two underperform or sell recommendations to their clients. On Motley Fool an unbelievable 28,709 readers have given the stock a 92% vote of confidence to beat the market. TheStreet rates this an A stock. Short interest has not wavered and has stayed steady at only one average day's trading volume. Analysts predict that if their numbers are correct investors could see an annual total rate of return in the 15%-22% range over the next five years.

Conclusion: If you own Apple, hold on to it. If you are trying to decide to buy more, realize that this is a stock with double-digit projections for growth in revenue and earnings selling at a discount to the market. Analysts are telling their clients they can make 15% to 22% annual total return.

When to buy? Draw a chart like the one below and as soon as you see the upper 14-day turtle channel increases and/or the price crosses the 20-day moving average hit the buy button.

I sold Apple when it first showed weakness and will buy back in when I see the conditions I outlined above materialize.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.