Should I add Apple ($AAPL) to my IRA in 2013? That’s the question that many investors are asking themselves when thinking about their 2013 IRA positioning. On December 31, 2012, I added AAPL to my IRA at $525 after getting a bounce from the $505 area early in the morning. Shares closed the day at $533.
A lot of people are shying away from buying into Apple since the stock pulled back from its high of $705, which it hit in September 2012, down to $500 — a near 30% drop in its share price in the last three months. From the beginning of the year, AAPL is still up 30% YTD, so its still been one the best performing stocks year-to-date among widely-held stocks. I view the Q4 sell off in Apple due to profit taking which accelerated in the last quarter for investors who wanted to lock in gains in 2012 when tax rates were set to rise in 2013. Sometimes you just have to book profits.
It appears to me that most of the selling is out of the way and that 2013 can bring in phenomenal gains for Apple. On December 31, 2012, Apple is up $23.44 (4.6%). The increase in share price can partially be attributed to Barron’s article saying that the stock is undervalued and that’s exactly why I added AAPL to my IRA. Apple has a PE of 12, which is less than the S&P 500, still experiences strong year-over-year growth, and recently added a dividend which currently yields 2% per year. I view the 2012 Q4 AAPL selloff as one of the best buying opportunities of the year. You would have to go back to February 2012 to pick up Apple shares at this price.
While the average price target for Apple has declined to $740 among analysts, Topeka Capital maintained a price target of $1,111. Brian White pointed out that sales of the iPad mini have been very strong in international markets. I believe that Apple has the potential to reach $750 by January 1, 2014, so I would be quite happy with a near 50% gain in 2013. Over the long-term, I can see Apple shares reaching $1,000. In order to get to that level, there must be a catalyst and Apple TV or an iPhone Smart Watch could be that catalyst. Even if Apple does not bring any new products to market in 2013, I remain confident with their current product cycle to warrant an investment at current prices.
Apple looks like a buy to me in 2013 and a stock that I believe is worth considering adding to your individual retirement account (IRA). Good luck investing in 2013.