Apple has certainly had some success lately with two big hits: iMac and iPod. Could this company, once a laughing stock for their blunders, be a good buy now?

1. Earnings expectations have increased due to higher sales of iPods and iMacs. These great products have renewed interest in Apple and its stock.
2. Apple has extremely minimal debt and $12.8 per share in cash. Since there are no pesky creditors and lots of cash, the company can better survive downturns.
3. Apple has a unique operating system. Customers who are roped in with flashy new computers (especially kids) might remain loyal when Apple stops being trendy and is just another computer maker.
4. CEO Steve Jobs has been around forever and has a history of fairly smart moves. He also runs PIXAR.
5. The company has an estimated 70% share of the legal download market. If and when the music industry wins and that market takes off, Apple may be the biggest benefactor.

1. The biggest reason to hate this company is the price. The company is priced at a forward P/E of 42.68. That is more than twice the P/E of the market.
2. Unlike Dell and HP, this company is considered more a fashion trend than a computer maker. Apple must continuously invent new flashy things to keep the public's attention. Innovation is good except when it is expected every couple of years and built into the price.
3. The company has an awful return on its equity. With a 5% return, Apple might as well be investing in TREASURY BONDS and throwing the computers out the window.
4. Apple has almost 17% of the company granted in options. They re-priced their options down for employees and gave directors tons of options. This is a company in the corporate governance doghouse.
5. Apple gets 40% of total revenue from consumers and 25% from the education market. This has two results. 1) If consumer preferences change, the company suffers. 2) If the economy slows the company will get doubly hit with slower consumer spending (already happening) and government budget cuts. As Dell has shown, it is much more profitable to deal with corporations.
6. Because Apple sells mostly to retailers and consumers, it must hold more inventory than a company like Dell. In tech companies, inventory has the shelf life of lettuce.

Before I begin my review of Apple's stock, let me say that the iPod is the coolest product I've ever owned. With that said, I don't think the company is worth roughly $15 billion dollars.

1. The iPod is one of the most innovative products in years, which is transforming the way music is heard and more importantly, purchased.
2. With over $5 billion in current assets, most of which is cash, Apple can buy companies that have compelling technologies or continue to collect interest on their money.
3. Innovative ideas compel people to purchase new products. Apple is betting that people will join the "Apple Philosophy" after they get comfortable with their iPods.
4. Steve Jobs!!! The founder and president is the reason Apple is back on the map. If not for him, Apple would have been bankrupt years ago.
5. Apple has one of the world's most recognized brands and a cult-like following when it comes to their customers.

1. The iPod is just one product. Remember the iMac, the colorful computer? It was just a fad, and iPod is getting a lot of good competition fast.
2. High cost of their products. I'm sorry, but poor people can't afford their computers. They are usually twice the cost of a normal PC and offer way less in terms of amenities.
3. High value. Apple may have a great brand, but $15 billion is way too much to pay for the success of just the iPod.
4. Low market share. Less than 2% of today's computers are Apple. Fewer and fewer people are buying Apple computers.
5. Lack of depth. Apple has always been a one trick pony, introducing one awesome product and then nothing for years

Editor's Note: Editor's Note: The opinions expressed here are not necessarily that of the publisher and/or distributors of the magazine. All analysis is meant for educational purposes only and not as financial advice. You should not make decisions based on information contained in brass without the advice of a qualified professional adviser.