Is Apple Inc. (AAPL) a Value Trap?

Investors should stick with Google Inc (NASDAQ:GOOG), as the company is projected to grow revenues significantly through the success of its advertising business along with the Android play store. This assumption is backed by analysts on a consensus basis anticipating 41.2% year-over-year growth in sales in the 2013 fiscal year.

Source: FreeStockCharts and Alex Cho

Based on the chart above, a Research In Motion Ltd (NASDAQ:BBRY) investor who bought above the 200-day moving average would have lost money either way. In the end, an investor’s investment thesis should be based on the soundness of the company’s business and whether or not it can sustain growth.

I have mentioned before the significant decline in year-over-year revenues from Research In Motion Ltd (NASDAQ:BBRY)’s device segment, and even went as far as to explain the weakness in the company’s marketing strategies and the shortcomings that could come from depending on an even larger advertising budget. I have repeatedly mentioned that BlackBerry was going to be a poor-performing investment.

I would not buy the stock at these cheaper levels; BlackBerry is the definition of a value trap.

Conclusion

Just because a stock has a lower earnings multiple doesn’t make it a bad investment opportunity. Yes, there are a lot of things that could be better with Apple right now. But until we know the full effects of its next product refresh cycle, we have no clue as to how accurate the management team’s guidance is. The guidance is forcing analysts to project 10% earnings growth for the current fiscal year. However, historically we have seen Apple Inc. (NASDAQ:AAPL) post some truly spectacular numbers after fooling the street with low-balled revenue and earnings guidance.

That being the case, investors should ignore investing based on the 200-day moving average because given enough time, standard rule-based techniques fail in the face of a company’s fundamentals.

The article Is Apple a Value Trap? originally appeared on Fool.com and is written by Alexander Cho.

Alexander Cho has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google. Alexander is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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