Speechless

by,

Suzanne Coleman

Wow, Apple.  Wow everything.  What is going on here people?!  This stock market trading is insane.

First off, when you trade, you trade in pennies, not dollars, OK?  Geez, it’s like these people have no idea what they’re doing…

Yeah, let’s start with that.  I’m getting to be a broken record here, but, maybe before you buy or sell a stock you might want to GET A CLUE?  Since I own Apple, I’ll be focusing on that as a cornerstone for this conversation.

A good company’s stock doesn’t lose 30-40% of its value in a couple of weeks.  This isn’t Netflix or Amazon, the two stocks that continue to be super over-valued compared to their actual earnings, this is Apple, a proven stock with quickly growing earnings and a PE that is actually too LOW for its pre-drop price.

Now let’s play on people’s “reason” behind the recent decline, worries about the loss of income from sales in China.  Let’s say China literally falls off of the face of the earth, maybe the earth’s crust crumbles and the surface detaches and it just simply floats out to space.  Now, who knows, maybe they have cell service out there, I don’t know, but let’s just say, just for fun, that they don’t.  So if this happens, does Apple whither and die due to the loss of this entire market?  What do you think?

Yeah, you’re right, the answer is NO.

Would its growth suffer?  Yes, yes it would, but I must say, this is a ridiculous scenario because as far as I know, and yes I have personally checked this myself this morning, the earth’s crust under China is in fact, securely adhered to the globe.  So traders, you really don’t need to worry about China disappearing completely as a market today or any day in the next millennium or so.

So now, back to what most of us perceive to be reality.

China is in the predicted retraction phase, our world’s economies are almost all interconnected now, and those of you who didn’t realize this after our economy pulled back, well, I guess you’ll believe me now?  🙂  It’s all physics, the “ripple effect” created by the waves that we made earlier has reached China.  Recent published reports stated that their economy might only grow like 5-7% this year.  Wow, that is “terrible!”  Of course, it can get worse, they might actually stop growing.  Or even go into a recession like we recently did…  But they’re not there yet.  Their growth is decelerating (and has been for maybe 2-3 years).  During this period of time Apple has been consistently seeing INCREASED sales and profits coming from China.  So, maybe a little perspective will help stabilize this market?  I hope you’re paying attention people…  Maybe I need to be more blunt?  Apple will not collapse and die because of a contraction in China’s economy.  Yes, it’s possible they might not grow as quickly as they have been, but that’s expected in any new market, right?  Yes, right.

A little more perspective.  Apple continues to be in an expansion phase due to the overseas markets’ late adoption of its extremely popular cell phone products, and it continues to innovate, providing consumers products that they can’t live without.  This stock was fairly valued before this series of drops.  And now with a PE of 11- something, this high-growth stock which is backed by billions in cash, is a great bargain.  People who bought in today will be very happy they did, and hopefully very soon.

Compare this to Netflix, with a PE of around 200 recently (i.e., the price is way too high), which has had similar growth and management success in the last 2 years or so.  Their price is still flying high; I would have expected their price to drop way more than Apple, but logic doesn’t seem to be the reigning force in the market this year.

Apple deserves more stability than this people, let’s start trading with some respect.  12-month estimates average 146.88.  So that’s about 40% upside from the current price of $104.50.  Yes, people, that is VERY good.  Buy.