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Apple Rebounds After "Insanely Insane" Sell-Off

 November 19, 2012 03:58 PM

(By Balaseshan) Apple Inc. (NASDAQ: AAPL) shares gained more than 7% in regular trade after a Wall Street analyst said that the recent sell-off was "insanely insane.", and it might be the best time to build positions in the shares. Shares of Apple were struggling for the past weeks over iPhone 5 production issues and Google Inc.'s (NASDAQ: GOOG) Android biting into Apple's share.

Apple shares were trading at $570 levels before the iPhone 5 release, on the day of launch the stock touched an all-time high of $705.10, but after September 21 the stock slid and returned to the $550 levels.

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"The sell-off over the past eight weeks is overdone. New "blockbuster" products for the holiday season — including the iPad Mini — as reasons for buying the stock. Apple could grow its earnings per share at a rate of 20 percent to 30 percent per year over the next five years," Topeka Capital Markets analyst Brian White wrote in a note seen by the Wall Street Journal.

White is bullish reasoning: the depressed valuation, new blockbuster products for the holiday season, the attractive long-term growth opportunities that lie ahead and the company's ability to distribute significant cash flow to investors, the WSJ reported.

"Apple's shares are a 'discount' because of the recent drop," wrote Morgan Stanley analyst Katy Huberty in a note seen by the Bloomberg.  "Sales of the iPhone 5 and iPad mini are providing a current boost, while sales in China and other emerging markets such as Brazil will sustain the company's growth longer term."

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During the beginning on November, according to a Reuters report, iPhones assembler Hon Hai Precision Industry, the entity of parent Foxconn Technology Group, has been finding it hard to cope with the massive demand for iPhone 5 units.

Following the launch, the Wall Street Journal quoted an executive saying the iPhone 5 is "the most difficult device that Foxconn has ever assembled. To make it light and thin, the design is very complicated."

In addition, as previously expected by BMO Capital Markets analyst Keith Bachman, Apple guided the first quarter below the Street view as the tech giant is experiencing supply constraints related to iPhone 5, making it difficult to cater to the huge demand.

According to IDC, the Android operating system powered nearly three out of four smartphones shipped worldwide in the recently ended quarter. Analysts note that Android-powered gadgets are flooding the market, and eating into Apple's turf by feeding appetites for innovation and low prices.

AAPL is trading up 6.56% at $562.30 on Monday. The stock has been trading between $363.32 and $705.07 for the past 52 weeks.



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