Recently, I've been getting a lot of emails from people wondering if it makes sense to buy shares of Apple Computer (Nadsaq: AAPL) due to the iPhone launch.

In fact, it seems that there are a lot of "Johnny come lately" investors out there looking to book a quick profit on the back on Apple's newest technology.

Rotten Apple?
But I just don't think it's a good idea to jump in now. And there are several reasons for this.

First off, just look at how the stock has skyrocketed since March (apparently in anticipation of this launch) from the mid $80s to its current $120. Now, this momentum simply cannot be maintained forever. In fact, I suspect that investors may learn that the hard way as some traders are sure to "sell on the news" now that the product launch is underway.

Valuation On The High Side
Another thing that concerns me is Apple's price-to-earnings multiple. Now, I know what you are probably thinking...Apple has traded at a lofty P/E for some time. So who is to say that in the near future the P/E metric is suddenly going to matter?

To that, I answer that P/E does matter, and that sooner or later when Apple investors stop looking through their rose-colored glasses, they are going to realize that the stock currently trades at a hefty 34 times this year's consensus estimate of $3.54 and at roughly 30 times next year's forecast of $4.07, and the stock is going to drop like a stone. After all, 34 times earnings is kind of rich for a company that's expected to grow its EPS at only a 15% clip over the next year, don't you think?

Another worry I continue to have is that the people who know the most about the company and its prospects, the insiders, are selling their stock. In fact, over the last six months execs parted with more than 972,000 shares. In short, if they are bailing, why should I put my hard money into the company?

What's Next for Apple?
Seriously, can you run down a litany of products that the company has in the hopper? I can't. I mean sure, the iPod was a hit, and all indications are that the iPhone will experience strong demand as well, but remember that stocks move on the anticipation of future earnings. And right now, I just don't see what Apple is going to do to follow up its last few acts.

Next, check out some other key metrics. Apple trades at almost 5 times sales, and at more than 8 times book value. In other words, what is going to support the stock if hard times hit? I mean sure, it has minimal debt and more than $14 a share in cash, which is certainly attractive. But for a $120 stock, I sure would like to see a little more in the way of hard assets.

More Than One Bad Apple in the Bunch
Just look at the trouble other big name technology stalwarts have had in the past. Remember the problems Microsoft (Nasdaq: MSFT) had with several of its Windows launches. Or how about the problems Dell (Nasdaq: DELL) had with its laptop batteries catching on fire. Even Apple has had its moments over the years, unexpectedly falling behind on production of its iMac a few years back. The point is that any one of a number of things could go wrong, and I just don't think Wall Street would be ready for it, or that the stock would react kindly.

The Bottom Line
Apple has run farther than I would have ever expected it to. However, I can't help but think that sooner or later this party is going to end, and I for one would not want to be the one left holding the bag.

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