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CNN Money recently ran an interesting article on the drop in Apple’s [stckqut]AAPL[/stckqut] share price. It is probably no secret to my readers that Apple’s share price has dropped fairly dramatically in the last several weeks.

In the article, Philip Elmer-DeWitt (the author) quotes 5 different investment pros and then finally each pro puts out a prediction for the price of Apple’s stock.

  • RBC Capital’s Amit Daryanani: Sticking with $750 price target.
  • Barclays’ Ben Reitzes:  Price target unchanged at $800.
  • CLSA’s Avi Silver: Poised To Rebound. $770 price target.
  • Piper Jaffray’s Gene Munster: Comfortable With FY13 Margin Assumptions. Reiterating $900 price target.
  • Avondale Partners’ John Bright: Initiating coverage with $600 price target.

I am also reiterating my commitment to Apple as soon as the bottom is found and the price starts to rise again. Why pay more if the price is dropping short term? I think Apple is probably a buy up to $820.

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Company name Apple Inc.
Stock ticker AAPL
Live stock price [stckqut]AAPL[/stckqut]
P/E compared to competitors Good

MANAGEMENT EXECUTION

Employee productivity Good
Sales growth Good
EPS growth Good
P/E growth Poor
EBIT growth Good

ANALYSIS

Confident Investor Rating Good
Target stock price (TWCA growth scenario) $1043.74
Target stock price (averages with growth) $1620.68
Target stock price (averages with no growth) $1293.72
Target stock price (manual assumptions) $1051.62

The following company description is from Google Finance: http://www.google.com/finance?q=aapl

Apple Inc. (Apple), along with its subsidiaries, is engaged in designing, manufacturing and marketing mobile communication and media devices, personal computers, and portable digital music players. It also sells a range of related software, services, peripherals, networking solutions, and third-party digital content and applications. The Company’s products and services include iPhone, iPad, Mac, iPod, Apple TV, a portfolio of consumer and professional software applications, the iOS and Mac OS X operating systems, iCloud, and a range of accessory, service and support offerings. It also sells and delivers digital content and applications through the iTunes Store, App Store, iBookstore, and Mac App Store. During the year ended November 24, 2011, the Company, as part of a consortium, acquired Nortel Networks Corporation’s patent portfolio. In February 2012, the Company acquired app-search engine Chomp.

 

Confident Investor comments: The calculations for the future stock price are actually quite a bit higher than what I settled on. I have a hard time predicting the stock over $1,000 but that is what came out! At this price and at this time, I think that a Confident Investor can confidently invest in this stock.

 

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Motley Fool is a great website with very useful advice for investors. They recently ran an article that discussed the one investment you should make if you are a new investor and can only afford one stock. Their choice was The Procter & Gamble Company [stckqut]pg[/stckqut]. I haven’t review P&G in a long time (almost 2 years) and the EPS growth has improved slightly so it is now probably a Fair company as opposed to a Poor company back then. The article made me think – what one company would I recommend for a new investor?

Obviously, my choice would not be P&G since it didn’t make my Watch List. In fact, the stock has been fairly flat since I reviewed it 2 years ago (it is trading within 2 or 3 dollars today of what it was doing in February 2010). I have nothing against P&G as the company makes fine products. I brush my teeth and wash my body and clothes with P&G products on a regular basis. But making good products is not good enough. Motley Fool describes how P&G doesn’t surprise its investors very often and has a stable dividend. My problem with that logic is that if you are a new investor then you are likely a young investor (and by young I am saying under 60 years old) and you need your investment to accumulate for several decades.

As I pondered this question, I remembered my favorite advice to investors of all ages: don’t buy and hold rather buy and evaluate! Buying one stock and assuming you are going to keep it for decades is almost a guaranteed losing proposition compared to riding the fastest moving stock at the time.  The new investor needs to be agile with money. Buy a stock that is growing nicely and then when it starts to go flat or decrease in value, dump it and buy a different company that is hot.

Today, that one stock could be Apple [stckqut]aapl[/stckqut] or Coach [stckqut]COH[/stckqut] or Ebix [stckqut]ebix[/stckqut] since these three are all doing nice runs as I write this article (and there are others on the Watch List that are having nice runs as well.) Tomorrow is another question. I have no idea who will be having a solid run tomorrow or next week or next month. I do know that eventually all companies go flat and have a pull-back so I want to jump off the train when that happens and catch the next fast moving express.

So nothing against the good folks at Motley Fool, but I think the advice of one stock is just not good advice. I want to beat the market, not just match it with a “safe” investment.