Generous Apple? (AAPL)

Apple Inc. (NASDAQ: AAPL) is a company that has been hyped and written about by many people in the last decade. To state any more good news about the company seems to just be repetitive. This time may be different, as I believe Apple Inc. is giving you an opportunity to own its stock on a significant pullback.

Off from its 52 week high of $215 and at a price of $196 I believe you can play the stock two ways. For investors who think long term I suggest that you initiate a position right here at the $196 level, and continue to buy on any further pullback in $10 increments. (Next buy area around $186) AAPL technically has bounced twice off of its 100 day MA in recent weeks, and could be poised to move higher.

Fundamentally the stock is cheap based on 2010 earnings. Reuters reports that AAPL is estimated to earn $12 in 2010. After backing out the cash that AAPL has on its balance sheet, which comes to $40 a share, the stock is really trading at $156. Based on those earlier estimates, Apple Inc. is trading at a P/E of nearly 13x thanks to the new accounting rules. AAPL is expected to grow at 18%, which makes AAPL’s PEG under 1. (Estimate and growth from Reuters)

If you find yourself to be a short term trader who is familiar with options, I would suggest that you look into the March 165 calls currently trading near $31.37 for any short term movements.