Is it Time to Sell Apple (AAPL)?

Apple Corp. has had tremendous success since its launch of the iPod. Its revenue and sales has sky rocketed since and it has looked back. Not to mention their line of Mac computers that boast safety from viruses and amazing graphics. Now another hype has got Apple on the headlines: the so called "itablet". The itablet is rumored to be a kindle spin off to enter the ebook business. However, details are still fuzzy, as well as price, design, etc.

Apple was up $125.38 (146.9%) in 2009. That is a massive gain in which, AAPL reached a new all-time high. However, many signs recently have lead me to a conclusion that Apple is no longer a buy but, a strong sell. Many of you may be surprised by this opinion but please read on to here my reasons.

1. AAPL is up large lately based on the itablet which we know not very much about. There for the price rising is partly based upon speculation, which is very risky. Speculation was a contributing factor in the recession/depression of 2008. Keep very updated on itablet news and how share prices will react.

2. Analysts are in love with this stock. Here are the analyst ratings for AAPL:
Buy: 31
Overweight: 4
Hold: 7
Underweight: 0
Sell: 1
(Marketwatch.com)

This is a huge tilt in favor of buy for AAPL. This is a huge indicator that this stock is being overbought and will dive very soon. The one lone analyst who has his head clear and thinking of the possible outcome of this potential disaster. The info above speaks for its self.

3. The stock price has hit an all-time high. As of January 1, 2010, the cost of a share of AAPL is $210.86. This is well off its 52 week low of $76.20 (Don't you wish you bought it then?). The price has inflated a lot and will eventually dive down to a more "normal level". Once the speculation goes away and the analysts turn against their ratings, this price will be headed way lower. AAPL is very risky because of the fact that the speculation could stop at any time or without warning.

4. "Those who don't learn from the past are doomed to repeat it". This quote is very useful for explaining AAPL. History tells us that overbought and over hyped stocks end up diving and you lose a lot of money. Look back 10 years ago at the Internet stocks bubble. Similar situation, speculation on Internet stocks and analysts "buy" ratings sent the stocks sailing upwards. Then they became so overbought that they crashed and burned. People lost a lot of money on those stocks. Not to mention they never really rebounded. However, I don't think Apple will be the same there. Apple will dive but it will eventually rebound in the long term.

In conclusion, it may be time to start heading for the exits on AAPL. There is a significant amount of risk that needs to be realized. The analyst ratings above are not normal and that needs to be realized. This stock is being overbought and can not sustain this type of price increase. I am not saying Apple is bad company at all, it is a very good company with good management. However, as the stock goes, it is a little risky and overinflated. My recommendation is to sell AAPL but once the price does its major dive, get back in. The long term is good for AAPL. It is the short term that really scares me. Its balance sheet is clean, as well as its revenue. Apple is overall a good stock, just not in the short term.

Sources:
http://finance.yahoo.com/q?s=AAPL
http://finance.yahoo.com/q/it?s=AAPL
http://www.marketwatch.com/investing/stock/AAPL/analystestimates?subview=ratings
http://en.wikipedia.org/wiki/Dot-com_bubble