Is Apple a good buy?

At the current P/E, it is cheap especially if you consider their cash reserve. However, Apple will not have the same growth rate beyond 2015. As of 2012, it is turning itself from a growth stock to a value stock with minor dividend. After one or two upgrades by the consumers, the current products will not be economically feasible for upgrades except to boost one's social status. I expect many will take profit in the 4Q 2012 expecting higher capital gain tax next year. My bet is it will come back to 700 if we have good sales of iPhone5 in China. The lure warm reception in China is not due to the products and the market. It is due to Apple’s allotment system and the supply.   

In addition, Apple has lost a visionary leader Steve Jobs. I hope he was not replaced by similar managers at Microsoft, who are responsible for Microsoft's lost decade without innovations. Apple has a lot of cash to finance new projects. High tech business is tough as you need to build a better mouse trap. When the mouse trap becomes a commodity, it will not have a good margin profit. Apple still has a lot of new mouse traps or using the iPad for a lot of applications. It will fluctuate between 750 and 500. Apple will benefit itself with splitting the stock by 1 to 10.

There are bright spots for Apple:

1.       Apple Text Book. Imagine all students carry an iPad instead of text books.

2.       Apple TV. It is a loser so far and it is a very risky and expensive venture. However, the potential is great. It could give all cable companies a run for the money.

3.       While the iPad and iPhone are peaking in the hardware, the software and contents for these devices to access have no limit. We have witnessed how it helps the folks with autism. I can envision many similar applications.

4.       Apple moves to Kindle's market. iPad is too big to be used to read books during commute. You need to hold an iPad with two hands. Kindle is still king for commuters.  However, the iPad, making less profit margins, will be Apple’s answer to Kindle.

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Disclaimer. I'm no responsible for your actions in your investment. Treat this as educational information and past performance does not guarantee future performance.