Apple's Plunge: Why Investors Should Sit Tight

Apple shares look extraordinarily cheap following a large drop on disappointing results, but they could get cheaper.

Ouch! It was a painful day for shareholders of Apple (symbol AAPL). A day after after the company reported disappointing results for the quarter that ended in December, the shares tumbled nearly 12% on January 24, closing at $450.46. And there are reasons to believe the stock hasn't turned the corner yet.

Several factors were behind the plunge. Although Apple earned a tidy $13.1 billion in the first quarter of its fiscal year, profits were flat compared with the same quarter a year earlier. (The October-December quarter in 2011 was one week longer than the same quarter in 2012, making for a slightly imperfect comparison). And even though Apple sold about 11 million more iPhones than it did in the same period of 2011, that was less than some analysts expected.

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Elizabeth Leary
Contributing Editor, Kiplinger's Personal Finance
Elizabeth Leary (née Ody) first joined Kiplinger in 2006 as a reporter, and has held various positions on staff and as a contributor in the years since. Her writing has also appeared in Barron's, BloombergBusinessweek, The Washington Post and other outlets.