Apple (AAPL) has wildly underperformed other technology stocks, making the shares a bargain as the company enters the holiday-shopping season with a new iPhone, iPad mini and Mac laptops. That's what many Wall Street analysts are saying.
Over the past three months, Apple shares have lost 18.6%, compared to a loss of 7.3% for the technology benchmarkNasdaq. Topeka Capital Markets analyst Brian White believes this drastic under-performance might be over. He called the selloff in Apple shares "insanely insane," given the valuation at which Apple shares are trading. According to White's calculations, Apple is trading at 7.6 times 2013 earnings, excluding cash.
"Those investors that have missed Apple or have been under-weight the stock, now have another opportunity to buy Apple before sentiment takes a turn for the positive during what has historically been the strongest quarter of the year for the stock," White wrote in his note. He rates Apple "buy" and has a $1,111 price target on Apple, the highest on Wall Street.
Related Articles
There are several theories why Apple shares have plunged. They include consumers tiring of Apple products, a lack of innovation, competition from the likes of Samsung, Google (GOOG), Amazon (AMZN) and others. There is also concern that Apple's incredibly wide gross profit margins may shrink, as the company announces new products (Apple's iPad Mini: What It Means for Investors) and gets squeezed by its suppliers.
There are factors outside of the technology industry that are weighing on the stock. The so-called fiscal cliff in the U.S., a weak European economy and year-end tax-related selling are among them.
Rumors of a Samsung price hike on application processors sold to Apple were later proven to be untrue, but that possibility at anytime would erode Apple's profits.
Though Apple has had its share of negative press, the company has bright prospects going into the all-important holiday-shopping season -- and into 2013. The iPhone 5 is a hit, having sold 5 million units its first weekend. The iPad mini has been well-received by journalists and consumers alike. The redesigned iMac, scheduled for release later this month and in December, was the most eye-catching product at Apple's October product launch. In other words, Apple has plenty going for it.
Topeka Capital Markets' White isn't the only analyst on Wall Street who's super-bullish on Apple. The average price target on Apple is $760, according to data compiled by Thomson Reuters. That's 44% higher than where Apple shares closed on Friday, and that factors in a 30.2% return so far this year. Amazon shares are right behind Apple, gaining 30.1% since the beginning of January. Google shares lag, with shares up only 0.2%.
Interested in more on Apple? See TheStreet Ratings' report card for this stock.
>>> On Tuesday, November 20 at 6pm ET, TheStreet will host a Trade Credit Insurance webinar with Todd Lynady, Senior Underwriter for Zurich in North America and Mike DeLuca, Senior Partner of One Source. Register now.
--Written by Chris Ciaccia at TheStreet
