Is Apple’s Stock a BUY at Today’s Price?

Is now a good time to buy Apple’s (NASDAQ:AAPL) stock? Investing in the iPhone maker is not an easy decision to make for the average investor considering the scale of investment it requires; but, it’s impossible to ignore a company that has set all sorts of valuation records recently. Let’s analyze the stock with four relevant sections of our CHEAT SHEET investing framework.

H = High Quality Product Pipeline for Future Good News

Apple’s massive success has hinged on its extremely popular products. These distinguishing and market-changing devices have attracted a devoted following and solid customer base. However, while both the iPhone and iPad remain top sellers in their respective categories, a multitude of rivals means the company can’t afford to slow new releases in the product cycle. The good news for investors is Apple refreshes their product cycle like clockwork. Toward the beginning of this year, chief executive Tim Cook promised the company had “some amazing new products in the pipeline.” That’s business as usual for Apple.

While Apple announced upgrades to its Mac and MacBook line during the June developers’ conference, expectations for new mobile devices have grown exponentially over the last few months. Analysts and supply line sources are fairly certain the sixth-generation iPhone will come as soon as early next month, while a smaller version of the ultra high-selling iPad is also predicted.

And while a full-fledged television from the company may still be some distance away, it carries a huge profit potential. Apple’s market cap recently touched a record mark of $623 billion based on the optimism around these new devices. The company may not touch the virginal $1 trillion mark, but it’s safe to say Apple’s pipeline is chock full products likely to bring in much future good news.

E = Earnings Are Increasing Quarter-Over-Quarter

Apple’s earnings for the most recent quarter fell short of expectations, but still jumped more than 20 percent compared with the same period last year. The company earned $8.8 billion, while revenue grew nearly 23 percent to $35 billion. Moreover, Apple was the first to admit that most of the negative effect came from release rumors and speculations about the new iPhone and iPad Mini. But Apple has routinely beaten analyst expectations, coming in under estimates only twice in ten long years.

As CCS Insight analyst John Jackson said back in July, the fact is “Apple is in that rarest of all positions where the Street will punish them for anything less than an excess of success.”

According to Nasdaq, analysts are expecting the company to grow its earnings at an average annual rate of 22.68 percent. In addition, Apple’s profit growth has outpaced its share increase, resulting in a lower price-to-earnings ratio. The stock has increased more than 80-fold in the past decade, while earnings per share have gained more than 300 times to $28.05 per share in the last fiscal year. That’s performance we love to see at Wall St. Cheat Sheet.

E = Excellent Relative Performance Versus Peers and Sector

The S&P 500’s tech sector is up 16 percent since October 2007 when the broad market hit its all-time peak. However, if we remove Apple from the calculation, the sector is down 3.7 percent during the same period. Over a five-year period, Apple has climbed 453 percent, while the broader market has been pretty much flat. The company’s shares are up 33 percent over the past year, seven times the Dow Jones Industrial Average. That’s how strongly Apple has performed over the last few years compared to its peers.

The iPad — which is already one of the biggest contributors to Apple revenues along with the iPhone — has a nearly 70 percent share of the global tablet market and rivals lag too far behind to pose a significant threat anytime soon. Samsung (SSNLF), the No.2 seller of tablets, only has a 9.2 percent of the market and is followed by Amazon (NASDAQ:AMZN) with 4.2 percent. While both Google (NASDAQ:GOOG) and Microsoft (NASDAQ:MSFT) have announced their entries into the field, coming to market two years later than Apple is sure to have a negative impact on their potential versus the iPad.

T = Trends Support the Industry in which the Company Operates

The iPhone and iPad together contribute more than 60 percent of Apple’s revenues. The two devices are respectively part of two markets projected to grow multiple times over the next few years. Apple has room to grow its current 23 percent share of the global smartphone market, which is expected to cross the billion-unit mark in 2014.

While Apple already dominates tablet sales, the overall global market for the device is still a nascent one. Worldwide shipments of tablets this year is expected to be around 110 million units, reach 142 million next year, and touch 222 million by 2016, according to IDC. Apple is not expected to lose its hold anytime soon, with its grip likely to strengthen if it comes out with the rumored iPad Mini, a smaller, and cheaper, version of the iPad. Industry trends indicate no slowing of Apple product sales at the moment. With mobile becoming the biggest wave to ride in the world, Apple surely has more wind in its sails for a long time to come.

Apple has been a huge winning stock pick for Wall St. Cheat Sheet Newsletter subscribers. Don’t waste another minute — click here and get more of our CHEAT SHEET stock picks now.