Our conclusion is that, at best, investors should take a wait-and-see approach before jumping into Apple shares at the current price, since we do not believe that the stock necessarily has a „right” to trade higher on the basis of a low P/E ratio.
What will it take for Apple to turn around and sustain a bold, new price uptrend? Clearly, as with any other leading-edge growth stock, it will take a resumption of strong annual and quarterly earnings growth. And what will the first signs of such a critical fundamental development? The market’s „macro-mind” will likely figure it out first, and it may initially take the form of a strong technical buy signal coupled with a high P/E as the market again begins to place a high value on Apple’s future earnings stream. If and when the technical evidence emerges to support such a development, we will be more than happy to be aggressive buyers of the stock. For now, caution is advised.
Disclosure: Mr. Morales and Mr. Kacher are short Apple.
Does Apple’s P/E mean it must trade higher? – MarketWatch.
deci si ei realizeaza ca higher earnings will push AAPL back up.