Apple Stock and China and Capital Gains: The Case for Up

In the month since this Forbes piece on Apple’s (AAPL) prospects in China ran, the stock has continued its slide, making any upside argument more worth listening to. So we re-read it.

AAPL Chart

AAPL data by YCharts

Connie Guglielmo smartly discusses the likelihood of a distribution agreement between Apple and China Mobile (CHL), the dominant carrier in China with 700 million subscribers. Challenges remain, including some technical hurdles, to getting Apple’s latest iPhone running on China Mobile’s network. But the two companies would seem to have every incentive to overcome those hurdles. And, the argument goes, that could accelerate Apple’s revenue in a way that would once again excite investors.

Any juggernaut will experience some rough seas. With some investors taking gains in Apple ahead of a potentially higher capital gains tax rate, and growing concern that the gadgeteer might have run out of new ideas, there has been tremendous pressure on the shares.

AAPL Chart

AAPL data by YCharts

With Apple trading at a PE ratio of about 12, try looking at similarly-valued stocks on the YChart Stock Screener (we screened for market caps over $20 billion and PEs between 11.5 and 12.5). Sure, there are some safe-ish bets there, but do any of those stocks – Illinois Tool (ITW), Goldman Sachs (GS), PNC Financial (PNC) – have the potential upside Apple does?

Jeff Bailey, The Editor of YCharts, is a former reporter, editor and columnist at the Wall Street Journal and New York Times. He can be reached at editor@ycharts.com.

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