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Welcome to the Equities Section of Options Realm |
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Today (3/12/2007) I am writing to you about AAPL. Apple is a very interesting company to me because it has displayed how a product can resurrect a company. The I-Pod has done wonders for Apple as a company but what about the stock? Apple is a stock that I have advised people to buy multiple times over the past year and many of the people I know still have positions in aapl. One thing that many of these people are now doing is reevaluating their positions in the stock. In the past it has be shown that once aapl get over 90 it has a hard time trading higher. This fact alone is leading many of the people I know to unload the stock and walk away with their profits. Others have different reasons for wanting out now and I will now discuss what those reasons are. From a fundamental standpoint Apple is a well run company that has grown rapidly over the past few years. They have been able to continually beat market expectations and have almost defied the laws of gravity. This is where some of the concerns of investors are. The way Apple is priced this breakneck growth will have to continue. Where will it come from? The new I-Phone is supposed to bring in growth but there are a few problems I see with this line of thinking. The first is that it is only available to Cingular subscribers. That cuts out a lot of the potential buying market. Secondly, the people who can afford the new I-Phone will be somewhat limited as the phone cost over 500 dollars. Then add in the fact that the I-Phone will be replacing I-Pod sales it will be taking away from Apples biggest seller. After we look at all of these factors more questions are raised about where the growth will come from and in order to answer that I think we need to look at the sales of Apple computers. The sales of computers is one area where I feel Apple will continue to grow. I know that most of the college age students that I talk to are switching to Apple computers from computers that run on Windows. The video chats and built in cameras are now hip and cool. While some students that I have talked to do not plan on switching from their computers running Windows Apple seems to be invading college campuses all over the United States. Overall while I do not feel that the I-Phone will provided the growth that is needed to justify aapl’s current stock price of over 89 dollars a share I feel that their computer sales will continue to grow. And while computer sales may continue to go up I agree with those who are selling aapl now that it is about to break 90 again. It is not that I feel Apple is a bad company but I feel that the stock price has sprinted ahead of what the company’s true value is. |
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