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Apple (AAPL): Time To Buy On The Big Dip?

Apple (AAPL): Time To Buy On The Big Dip?
Image Courtesy: AppleInsider

According to Andy Zaky of Bullish Cross right now may be the best time to buy Apple Inc. (NASDAQ:AAPL) stock.  Zaky says that his firm, Bullish Cross, only has recommended buying Apple Inc. (NASDAQ:AAPL) four times before once the price has been deeply oversold or depressed valuation levels.  Recently, Apple filled the criteria needed for Zaky to make a recommendation.

The firm says that Apple is a “strong buy” around $500-$530 a share and can be bought at the most between $530-$550.  The firm has a target price of $750 which they believe will be met by the end of January 2013.  That is a nice 50% gain on the stock if they are proven to be right.

Here is their reasoning to buy the stock now:  At current levels, Apple trades with a P/E of 13 and a P/E of 10.56 with Bullish Cross’s October earnings estimates.

The last time Apple Inc. (NASDAQ:AAPL) hit near these lows, the stock was trading around 13.13 P/E which was around November 25, 2011.  During the June 2011 lows for Apple, the stock saw a low of 15 P/E. Obviously, when looking at the P/E ratio, we are getting the best deal in over a year.  In fact, as the Bullish Cross highlights, Apple’s P/E is at an 8 year low currently which points to an oversold level for Apple.

Ultimately, you can not argue with Zaky’s evidence. That stock is definitely cheap compared to historical data.  That being said, I am a little worried about the market this summer as conditions in Europe are expected to deteriorate.  There are two choices right now that investors must face: buy now and hope Europe is not as bad as it seems or wait and buy at a lower price (assuming the stock falls with the rest of the market).  It is a tough decision but ultimately, it depends on your investing style.

Over the long haul, Apple is definitely a winner.  There are more rumors as to what product Apple will be releasing later this year which is also helping the stock along.  On to a more tangible subject, Apple has been expanding its stores lately as I wrote about last week.  The technology firm is opening stores in various metropolises around the world which should help the company be able to reel in some more cash.  The bottom line here is that Apple is cheap right now compared to historical standards and according to Andy Zaky, could see $750 within a year.


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