AAPL shares: buy on the dips?

Yesterday's news about Steve Jobs' health was released while U.S. financial markets were closed and the day before Apple releases its Q1 2011 financial results. In PR, timing is everything.
Written by Jason D. O'Grady, Contributor

Yesterday's news of Steve Jobs' second medical leave of absence (in as many years) was released while U.S. financial markets were closed in observance of the Martin Luther King day holiday.

It also came the day before Apple releases its Q1 2011 financial results -- which happens today at 2:00 pm PT / 5:00 pm ET and will be available via audio webcast. The consensus is that Apple should announce another amazing quarter with Reuters estimating a 50 percent jump in sales.

Apple carefully timed the release of Jobs' health news to give investors one full day to digest it and right before it announces another record quarter. Can you blame them?

Jobs' health issues gave Apple investors a serious gut check and left many spooked and wondering what to do with their AAPL holdings.

AAPL shares has been on a tear lately, closing Friday at $348 per share (a 52-week high). That's up from a 52-week low of $190, or up almost 70 percent in one year.

I asked Twitter if #AAPL was a buy, sell or a hold. Here's a sampling of what you had to say

  • Buy on any significant dips tomorrow.
  • - Sell tomorrow buy back later in the week last time jobs left-dropped 8% in two days earnings might help but it will take time
  • - (AAPL shares) were down 7% in Frankfurt (Monday)
  • - Sell at the open - let it fall - buy b4 close
  • - 10% down. Buying!

I think that Apple could take as much as a 10 percent haircut tomorrow on the news but I bet that most investors will sit on the sidelines to wait for the earnings report before reacting. I wouldn't be surprised if Jobs joins the conference call for a quick morale boost and rah-rah session on his way out the door.

I think that Apple could be a $500 stock and split within a year.

Its fundamental are rock-solid and it has a full year lead on its competition in many areas. Hypothetically, if Jobs had to be replaced tomorrow, a complete imbecile couldn't stop Apple's rocket-like trajectory for 3-5 years. And if someone halfway decent replaced Jobs, Apple could continue to dominate for another 10-15 years. Easy.

Before you make any hasty decision, take a deep breath and remember that Apple is a long-term play.

I recommend that you also read this excellent piece on Steve Jobs from 2009 by Mike Arrington (What If Steve Jobs Hadn't Returned To Apple In 1997?) and MG Siegler's A Few Thoughts On Apple’s 2011, Stock, Tim Cook, And The Future.

If you're OCD about such things, you can track Apple stock throughout the day by setting up Twitter searches for AAPL#AAPL and $AAPL in TweetDeck, or if Twitter's not your thing, track AAPL shares all day in your OS X menu bar with TickerMenu (that's what I use):

(*as stated in my disclosure, I don't own any AAPL stock)

Update Jan 18: AAPL closed at $340.65 (-7.83%). Look for Apple stock to recover tomorrow after Apple posted record earnings and sales -- and people buying on the dips.

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