Should You Buy Apple Stock Right Now?

They say when something seems too good to be true, it is . That axiom seems to
be especially true for stocks. Yet, as much as I'd like to say Apple (NASDAQ:
AAPL ) is too good to be true, it isn't. Believe me. I looked for ways to find
fault in Apple flawed technology, unattainable expectations, weakening sales,
anything. The company is bulletproof, and will be for at least a couple of more
years. That doesn't mean you should buy into Apple indiscriminately, though.
Heres why: The Usual Suspects When Apple first unveiled the iPod back in 2001,
did any of us really foresee how miniature music players would plant the seeds
for the world-changing proliferation of smartphones and tablets (a race Apple
has led the entire time)? It's just been one hit after another the iPod, then
the iPhone, then the iPad. Even the failed Apple TV effort from 2007 is being
revived, and now it has the technological architecture to support the service in
place. It's just hard to believe one company can be that dominant in multiple
areas for so long. Yet, Apple has done it. After a decade's worth of it,
what's a couple of more years? Then there's the valuation question. We've
seen growth stories before where a frothy price/earnings ratio and a bloated
price/sales ratio didn't matter … until they did. The tech meltdown of 2000
comes to mind, though Netflix (NASDAQ: NFLX ) is a more recent example. Few
would argue that Netflix has a massive amount of consumer appeal, and investors
didn't seem to mind a P/E ratio that exceeded 60 for the better part of 2011
since earnings were growing like crazy. And to be fair, the numbers weren't
fudged; Netflix really did generate earnings of $3.28 per share over the 12
months between mid-2010 and mid-2011, which was more than four times the
company's earnings rate from 2007. However, Netflix also was a case that
indeed was too good to be true. When the organization's content suppliers saw
how well the company was doing using their television shows and movies, these
same content suppliers wanted a bigger piece of the pie simply because they knew
Netflix could afford it. Thing is, it ultimately would be coming out of the
shareholders' cut. Goodbye earnings! In other words, it was too good to last.
So it didn't. NFLX shares fell from more than $300 in July to $62 in November
pushing that high P/E ratio down to the teens following Netflix's ill-advised
decision to change its plan pricing rather than share some more wealth with its
providers. What's this got to do with Apple? Well, nothing. That's the
point. Despite stunning earnings growth from $3.93 per share in 2007 to $27.67
for the past four quarters, the stock's gains actually have trailed that
growth pace. As such, the P/E ratio has fallen from 50 then to a mere 15.2 now
a valuation few should have any problem with, and the cheapest the stock has
been in years. More than any of the key like it or not criteria, though, the
AAPL's earnings aren't in jeopardy the way Netflix's earnings ended up
being. Apple's products are in sustainable demand.