Since January of this year I have been holding a small position in Apple at $163. During the last big dip, I bought more shares in the 120s and sold them again in the 180s. Now the stock is rebounding again but the new iPhone hasn’t been the killer everyone had expected. Fair value for the stock is now $168 and then you can expect some resistance until the next earnings release.
The good news is Steve Jobs is reportedly healthy which means the Apple vision will continue with him at the helm for the time being. He had been diagnosed with pancreatic cancer but it was operable and he’s recovered nicely. His most recent appearance at the Apple WWDC in San Francisco had investors and consumers alike worried but it turns out to be a little more than your average bug (common cold). His publicist confirmed it was not life threatening.
Apple stock is fickle and seems to rise and fall with news like this which makes it harder to pay attention to earnings because it isn’t the only factor that determines this stock’s price. It’s a large factor, but not the only one.
With that in mind, Apples growth is currently 16% and trades at 31 times earnings with fair value at 33 times earnings, giving you that $168 price.
I bought 20 shares yesterday at 157 and will sell them at my target price but keep my original share position at $163 to ride it out. For the novice investor, this practice is called “trading around a position”. By purchasing shares at a price just under fair value you can keep an eye on the stock, buy during dips and sell into strength, creating a nice profit wave after wave if you get my meaning.
I’m still happy with my recent trade in WFC which freed up capital for me to put into Apple.
It’s a tough market and finding these kinds of solid performers can give you the edge on your portfolio and let you have a little fun trading the markets since nobody likes to lose money. If you are more into short selling, I don’t have any recommendations for you except to say that Timothy Sykes has the best method and most consistent returns I have ever seen for short selling penny stocks. You can check out his site and his DVD using the banner ad you see on this site.
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