Every time I check AAPL through my investor account, I see a big buy recommendation (strong buy) predicting that the stock will be at $325 by the end of the year. I was always wondering how much that recommendation relates to real life, so I just paid a visit to my local electronics retailer, which is the largest retailer in Canada.

I asked if they had ipads in stock, which they gladly answered yes, and tried to sell one of the 6 models they have (and they have them all). Ebay is full of online retailers just trying to offload all the ipads they have in stock. I then asked about the iphone 4, they had none in stock, but they will have early next week. Hmmm… Bottom line there is no shortage, or maybe there is no demand?

On the way back I was thinking about the ipad, sure it’s a very nice gadget, and I will definitely buy one for my sister, but the thing is, it’s very expensive for what it can do. In my opinion, it’s a toy, no more no less. Of course there is this glimpse of hope for Apple where online newspapers will all become paid services on the ipad, which will turn the ipad into a need more than a want (the want factor is already not that high).

Apple has a lot of tricks under its sleeve still, the istore with all the trash they sell to people generates a lot of money. The computer section is another good thing, but I’m sure this area will be soon in decline, as their market share is decreasing, and the general market for computers is not that strong.

Let’s summarize this post:

– ipad sales are disappointing, and the ipad is in desperate need for some strategic alliances with online newspapers and other services to turn into a need. I also do think that Apple will have no other choice but to lower its price, sooner or later.
– iphone 4 sales are strong, but not that strong (as Apple executives thought). The antennagate still weighs on the sales, and I do think that the market is now a bit saturated with all these smartphones, including the older version of the iphone.
– Computer sales are most likely in a downtrend, due to the loss of market share and the general weak market for computer sales.

There is another important thing to mention, the Chinese factories producing the ipads and the iphones are currently under scrutiny (child labor) and they are forced to give raises to their workers. Of course, the increased costs will be passed to Apple (the company), and that’s where the buck will stop. Apple will not be able to pass the increased costs to its products (we’re not talking about wheat here), and I disagree with a lot of analysts (apparently long on AAPL) that this won’t affect Apple as their profit margin is too high. It will definitely affect Apple, as they won’t be able to raise the price to cover these increased costs, and they are, with time, forced to reduce the price of these already overpriced toys.

AAPL is a strong buy below $240, but I’d be surprised if the stock closes the year above the $280 mark.