Update on MacWorld Rally
Saturday, January 12, 2008
Right around Christmas-time I asked whether a pre-MacWorld rally might be in the offing for Apple (NASDAQ: AAPL) - it turns out the answer is a resounding: NO. I originally blogged about it when the stock was trading around 190; it did have a nice little 10 point run up to 200, but came crashing back to around 170.
I think this suggests that expectations are pretty low for this year's MacWorld event. Granted, Steve Jobs certainly isn't going to announce anything as blockbuster as last year's iPhone, but that doesn't mean he isn't going to announce something cool. And even if he doesn't announce some awesome new product, I think an update on iPhone and Mac sales might be enough to get Wall Street excited for the stock again.
On Fast Money tonight Pete suggested that this stock is cheaply valued given its growth potential... I'm not entirely sure I agree. At 26x forward P/E and 1.6x PEG I wouldn't call this stock expensive, but I wouldn't call it dirt cheap either. Its not the kind of stock I would own purely on valuation, because I think in this dangerous market, it could get sold down pretty hard if the bears are able to take control. However, I still think the MacWorld trade is viable, but it really depends on how the stock opens on Monday. Jobs gives his keynote speech on Tuesday afternoon. If the stock gaps down on Monday it could be an opportunity to buy for a trade, otherwise, pass on it. Right now the risk/reward favors the long side, since the market is already pricing in pretty low expectations for the conference.
On a non-financial note, I am very curious to see if Steve Jobs really does have another ace up his sleeve this year. I'm hearing rumors of a ultra-thin Mac laptop and a new and improved iPhone, lets see if there is anything else that surprises me.
Posted by Rob Pitingolo 12:19 AM
Labels: Apple Inc.
