Last summer, Apple (AAPL) was the hottest stock on earth.
Pretty much every analyst on Wall Street loved it.
And pretty much every analyst thought it was headed to $1,000 a share.
(And once the stock neared $700, you pretty much had to think that, or you wouldn't have wanted to buy it, because the return wouldn't have justified the risk.)
All this optimism came despite the fact that Apple increasingly faced several big questions and challenges:
Pressure on its profit margin as competitors caught up with the iPhone and iPad
The declining marginal improvement of each new generation of iPhone and iPad
A change in the smartphone market in which the explosive growth moved to low-priced phones that Apple doesn't offer
A product-launch vacuum, in which Apple was not likely to release any major products for at least the first six months of 2013
The approach of the real post-Steve Jobs era
All of these issues were visible last summer. But Wall Street was so enthralled with the Apple story that barely a single analyst stepped back and argued that the gravy train might run into at least temporary trouble.
Now that Apple has fallen to ~$500 a share, however, analysts are elbowing each other out of the way to be the first to lock the barn door after the horse is gone.
(I made this mistake several times when I was a Wall Street analyst, so I certainly understand how it happens. But it's still amusing to watch everyone stop talking about "$1,000 a share" and start urging caution now that the stock has tanked.)
In any event, now that Apple's $500, is it finally a "buy?"
It's certainly much more attractive on a valuation basis than it was at $700.
At $500, Apple is trading at about 11-times last year's earnings. That's a low multiple for a company with the long-term growth prospects that Apple has. And the company has $125 billion in cash, so the implied valuation of the business alone is lower still.
Stocks can always get cheaper, and if Apple's stock is falling because Apple's business is falling apart, there's plenty of downside left.
But the stock is getting to a level where it wouldn't be surprising to see some big "value"-based investors step in.
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