I am waiting on the weakness to level off, but I am awfully tempted to step in an buy AAPL calls here.
1. technically, it is at a support level around the low 250s
2. it is freaken cheap. (on an discounted cash flow perspective)
lets look at the number in a dirty and quick manner...
The liquid cash the company has on hand is about $25B, which equates to $25/share. Take the cash value out of the stock at current price (253-25= 228) and we have a stock trading at est. 2010 PE of 17-18. BUT...
The stock has about another $20B in cash, which is considered illiquid (meaning it is tied up for a few months or years). Combine the cash hoard, and we have an equity who's future earnings power is being discounted to an est. 2010 PE of 15. (253-40=213; 213/13.80 = 15.4)
AAPL's large market cap is already being discounted in its valuation. (Do not believe the analyst that tell you other wise.) If you look at the future earnings of this company going out 2-3yrs, its EPS will continue to grow at a +15-20% clip. The 2010 est. PE (excluding cash) is telling investors that AAPL will grow EPS at less than 15% going forward.
Does that sound realistic?
(Heaven for bid something happens to Steve Jobs sometime in the near future, the earnings power of this company will be greater than 15% eps for the next few years.)