Apple Investor Amnesia Sets Up a 2013 Value
Dell and Hewlett Packard entered 2012 with PE ratio's just above 8 times trailing 12 month earnings, according to ycharts.
Unfortunately, for value investors expecting stock price gains on a bottoming of those historically discounted earnings multiples, Dell and HP had disastrous years, falling over 29% and 44% respectively, year-to-date.
In fact, as Dell's revenue and sales slowed through the year, its multiple has actually fallen. Currently, Dell's PE ratio stands at just over 7 times trailing 12-month earnings. Meanwhile, nearly $20 billion in M&A writedowns means HP has no GAAP earnings to speak of heading into 2013.
RIM's PE multiple has suffered a similar fate as the company turns to losses and an over 20% year-to-date stock loss on declining fundamentals and uncertainty surrounding its launch of BlackBerry 10.
Given the data, Apple investors may well brush of the company's late 2012 stock slump as some stock market pundits question whether this year represents market peak earnings for the nation's largest tech giant.
The real question next year may be whether tech sector value investors decide that in 2013, they'll pull the plug on failed PC-based turnaround bets and a similar stance on RIM.
Were Apple to become the value investing play to recover from value trap bets on Dell, HP and RIM, it could spark predictable stock gains in the New Year for the former, and further pain for the latter.
-- Written by Antoine Gara in New York