Is It Safe To Buy Apple Inc. (AAPL) Again?

Google Inc (NASDAQ:GOOG) and Microsoft Corporation (NASDAQ:MSFT) are Apple’s closest peers. Google trades at 22 times trailing earnings- net income has been impacted negatively by the company’s acquisition of Motorola Mobility Holdings. However, we’d think that Google’s bottom line should improve going forward as the Motorola business is integrated and the core Google business continues to grow. The forward P/E multiple is 15, representing a premium to Apple; we’re not sure that’s warranted. Microsoft trades at 8 times forward earnings estimates, though it’s likely that earnings will be temporarily higher as new versions of Windows and Office are released. As a result it seems to be priced about even with Apple, and given the uncertainty over how successful Windows 8 will be we would wait to make a decision here.

We would also compare Apple to Amazon.com, Inc. (NASDAQ:AMZN) and Research In Motion Limited (NASDAQ:RIMM). Amazon was unprofitable last quarter, and projections indicate that it will have very close to zero profits for 2012 even with a strong fourth quarter. Yet the stock has a very high valuation, at 145 times consensus earnings for 2013. Even with its good business opportunities we’d be more likely to consider it a short than a long at that price. Research in Motion has rallied recently on speculation that the new BlackBerry model may achieve good sales. It’s expected to be unprofitable in both the current fiscal year and next year, and so we’d avoid it.

We continue to think that Apple Inc. (NASDAQ:AAPL) is a good value, and likely the best value in its peer group. Its valuation is low enough compared to its trailing earnings that even modest earnings growth would make it undervalued at the current price.