Apple's Compelling Comeback

 | Nov 29, 2012 | 2:00 PM EST  | Comments
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Doesn't it seem like yesterday that we seemed to be getting 10-minute updates on every $5 drop in Apple's (AAPL) stock price?

Yet over the last eight trading sessions, the stock has very quietly moved from close to $500 to almost $600 this morning.

It seems like just yesterday we were talking about a 25% decline for Apple off its September all-time highs. As of now, it's off only 15%.That's a huge move, and any discussion about this rise has been muted compared with the over-analysis we heard when the stock was on the way down.

So what does it mean?

I'm not sure. I've commented earlier about how it has been completely normal to see Apple's stock pull back 11% to 40%-plus once a year for each of the last eight years. These pullbacks are then followed by violent rallies ... sometimes on the order of 100%.

I saw one stock commentator explain the pattern as a "slingshot." He said it had to do with institutional rebalancing when funds are overweight Apple and then panic-buying because they realize they're underweight.

I didn't quite follow the explanation for the move, although it's possible. From my perspective, the herky-jerky stock movements seem to come along with the territory for being such a large company that's still experiencing such enormous growth. The market is skeptical that the growth can continue, so traders pull back from owning Apple. Then they worry that the stock will continue to outperform and plough back in.

A few days ago in New York, Apple analyst Gene Munster spoke at the Ignition Conference about Apple. He made a few interesting predictions:

  • TV will come next November.
  • Within a couple of years, Apple will move to a six-month life cycle for introducing new phones.
  • It will come out with a $200 iPhone in a couple of years for the emerging markets.
  • It will do something interesting in the areas of wearable computers, 3D printing, nanorobots and automated technology (such as self-driving cars and consumer robotics).

So he believes Apple isn't just going to keep iterating on the next version of its phones and tablets -- as has been the bearish view all the way down from $705, from those who complain that Steve Jobs took any innovation the company had to the grave.

I continue to like Apple here.

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