Still Time to Catch a Rebounding Apple

Even with the stock's run-up, the valuation looks very attractive

The free-fall in Apple’s (NASDAQ:AAPL) shares from the $700 level has stopped. Since mid-November, the stock price has gone from $525.62 to around $586 now.

So is it time to jump in? Well, a variety of Wall Street analysts think so. For example, Morgan Stanley’s (NYSE:MS) Katy Huberty thinks Apple is selling at an attractive discount.

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And Topeka Capital Markets’ Brian White recently said the valuation is “insanely insane.” Of course, his price target is an uber-bullish $1,111.

For the most part, it looks like Apple will have another blowout Christmas season as the demand for iPhones and iPads seems to be nowhere in sight. According to a report from IBM (NYSE:IBM), the iPad has actually become the preferred mobile device for holiday shopping. It accounts for about 7% of sales from all mobile devices, with the iPhone just behind at 6.9%.

What about Google’s (NASDAQ:GOOG) Android? It’s only 4.5%.

But there’s more to Apple than a short-term burst in sales. Going into 2013, the company should also benefit from its continued expansion into global markets. No doubt, the biggest opportunity is China, which also has a deep affection for anything Apple. It seems like a good bet that China Mobile (NYSE:CHL) will adopt the iPhone some time next year, which would be a huge boost.

It’s true that Apple has made some missteps lately. The new iOS 6 map app and Siri voice assistant were total disasters. As a result, one of the company’s top executives, Scott Forstall, was forced out of the company.

Apple is also facing much more competition, especially in tablets. Its dominance of that market is quickly fading because of rivals like Amazon (NASDAQ:AMZN), Samsung and Lenovo.

Still, Apple is clearly the leader in the high-end market — and this isn’t likely to change anytime soon. The company has a world-class brand and tremendous distribution, which is greatly bolstered with its stores.

What’s more, Apple’s stock is trading at an attractive valuation. The forward price-earnings ratio is 10x, which compares to Microsoft’s (NASDAQ:MSFT) 8.5 and Google’s 14.5 If you strip out Apple’s $121 billion in cash, the multiple is only 7.8x. Apple even has a respectable dividend, now at an annual yield of 1.9%.

So for investors looking to benefit from the mobile megatrend, it’s tough to go wrong with Apple, especially in light of the valuation.

Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook” and “High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders.”  Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

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