The Right Time to Sell Apple's Stock Is ...
But the current bull-market run is about to complete its third year, and it's getting winded, so maybe long-term investors might want to take this time to revisit their goals for their investment in Apple.
In past years, taking Apple shares off the table has proven foolish, as every potential threat, including what was considered the ultimate one, the loss of Steve Jobs late last year, has done little to slow its growth.
Now at $528, its shares have had a 48% run up in the past 12 months, roughly consistent with its five-year annual return, which is amazing given its now $508 billion market value.
So the pressure is on the company to keep it up. Its latest product iteration of the iPad, the iPad 3, is widely expected to be introduced today. It's another step in determining whether consumers and investors will remain happy, an increasingly difficult challenge.
Just consider the latest results. In its most recent fiscal quarter, reported Jan. 25, unit sales of iPhones were up 128% from a year earlier, iPads rose 111%, Macs increased 26%, while iPods declined 21%.
Those statistics are why Wall Street analyst are so bullish. A recent S&P survey found 36 "buy" ratings, 13 "buy/holds," four "holds" and one "sell."
But at some point, something will eventually upset the Apple cart. Peter Cohan, a business consultant, author and business-management teacher at Babson College in Wellesley, Mass., speculated that any abrupt slowing in the company's earnings growth rate or a quarterly earnings miss versus its own projections would cause analysts to scale back price targets and precipitate a share-price slide.
"All a company has to do is miss once and you're dead for a year," given the sterling performance record for a company such as Apple, he said. "You have to beat the (Wall) Street expectations and raise your forecast every quarter."
Under Jobs, the company had a steady string "of inventions one after the other, that created an ability to come up with massive upside surprises," Cohan said. "Tim Cook
But Goldman Sachs said in a March 2 research note that it expects Apple's rampant growth to continue, hence its conviction list "buy" rating and suggestion that buyers be "aggressive."
"After the iPad 3 launch, we still expect several critical positive catalysts for Apple's stock this year," it said, including an updated iPhone 5 in the second half of this year, the beginning of a long-awaited return of cash to shareholders through a dividend, and strong growth in demand from emerging markets, all of which will help the company beat revenue and profit expectations.