An Apple a day...

...could lead to a healthy portfolio! Apple Computer (AAPL - chart) seems like a good, low risk play at this level, having pulled back to a low 30 multiple, and its 200-day moving average. The stock is certainly all about the iPod, and last quarter's earnings report wasn't enough to push the stock higher because they said they expect $4.3 billion in revenues for this quarter and the street wanted $4.8. Should that mean Apple's market cap get reduced by 28%? That doesn't seem logical, does it? I mean, Apple pulled in $5.7B in its last reported quarter and the street expected $5.04 - that, my friends, is crushing expectations. However, we must think about the potential negative. Perhaps the revenue guidance means Apple's growth is slowing drastically. But, even at 4.3B for this quarter, Apple's growth rate compared to the same quarter last year would be 32.5%. I'd be willing to pay 33x trailing earnings for that.

Let's take this further and think rationally (some people just look at the financials and stop there - that's scary business to me). Has anyone been to a mall lately? Those Apple stores are still as crowded as any college bar on this campus on a Saturday night (okay, there aren't lines waiting to get into the stores that I've been to). The big pullback of '06 looks more like profit-taking to me than any actual fear that the company can't continue to sell the heck out of those iPods.

With a little checking, we can see that shares were exchanging hands quickly in Q4 '05, but like I mentioned before, the stock has not performed well in '06. I'm curious to see the update to these filings in a few days. Regardless, I think this selling is overdone. I also love the fact that 7 analysts rate Apple a "hold". That keeps expectations down. Apple is still a buy, and this selloff reduces some risk. One interesting thing that may be worth keeping an eye on, however, is that Sigmatel - a flash memory supplier for the iPod Nano and Shuffle - cut its guidance partly because inventories are building up.

Still, at $62, I wonder how bruised the Apple needs to be in order for its shares to fall much further from here.

Finally, can we petition Mr. Jobs to change Apple's ticker to IPOD?

Next AAPL Earnings Release: April 19th, After Market Close