Great shorts are stocks that are over valued with huge price to earnings ratios hoping for huge sales and earnings growth in the future. The best shorts have 50, 75, and sometimes even 100 P/E ratios. When they fail to make their earnings and their growth declines their stock price collapses when the P/E ratio contracts to more reasonable levels. With a current P/E ratio of 15, the Apple really does not have far to fall from the tree with 75% annual earnings growth.
If an earnings miss can’t demolish Apple’s price then what can? A rally after a miss is a great sign of strength for this stock.
The hype surrounding the iPhone 5 will help this stock run up until its release.
The hype around a mini iPad will also help earnings expectations and the stock price when they go after a new market with a new price point.
When shorting stocks you should look for over valued stocks, junk stocks, companies that have made major missteps with investors or customers, or stocks with no real earnings. Apple is NONE of those things it is a real company with real earnings, innovations, and world changing technology. Apple was and still is one of the greatest monster stocks of the past decade, look else where for shorting, this is not the place.
