Apple Selloff

We know many of our readers own Apple stock.  AAPL has been in a sell off for some 6 months now.  A high of around $750 to now just at $400.   This for a company that has a solid product, a loyal fan base and I do mean "fan base", and trailer loads of cash in the bank.  The profits are solid and the future bright.  Add in a PE of 9, which is low for a defensive stock, much less a growth company that Apple surely is and you got a sell off that is not justified.  

Apple is selling off today due to lower than expected earnings reports from some of it's suppliers which signals to many Apple sales are in a steep decline.  That too is hogwash as mobile phones, mobile phablets, or just plain tablets are the future of computing and Apple sells a ton of these babies.  Yes, Samsung has come out with some innovative products that have eat the lunch of Apple lately.  The new Samsung phone is a nice piece and has some good features but nothing so innovative as to make many buyers run from Apple. The Samsung Note 2, which we personally own, is a brilliant piece of work and a game changer for many mobile devices.  The Note 2 is selling big time and everyone who owns it loves it.  However unless Apple is full of people who have not seized on the Samsung moves and are right now planning a counter punch we are fooled. Even without any new phones Apple will still sell lots of phones, make lots of profits, and pay a handsome dividend. 

We have 200 puts on Apple at $400 for May 3 and we are quite happy with owning Apple at that price.  Lots of opportunity for growth, lots of opportunities for call options going forward, and yes a 2.65% dividend which will likely be raised during their April 23 earnings report.  We suggest you consider Apple here at around $400.  We can not guarantee that it will not go lower, but sooner of later it should come back to this price and give you some capital gains plus more dividend payout than you can get from treasury bonds. The moment of most concern here remains next Tuesday when Apple reports earnings, but much of that concern is not baked into the price. Be careful, but take advantage of opportunities when they present themselves.   Frankly Apple payout's might be safer than treasury bonds with the huge cash pile backing it and growth potential.