Is Apple a Buy?

Apple (AAPL) stock is trading at an all-time high, as of about midday Friday. No doubt, Apple is a leader in innovation , revolutionizing the way Americans and the world listen to music and communicate on the phone. Earnings are strong and organic growth appears to be experienced in the U.S. and abroad. Does this point to a higher stock price, pushing the all-time record to new highs? Maybe, at least in the near future. Is this stock a buy? Here are three reasons why you should absolutely not buy this stock.

1) Company executives are selling stock.

A million shares of Apple stock were sold by company executives – including the COO and CFO – last Friday, which were restricted shares granted as compensation back in 2005. The restricted shares were not unlocked for sale until this week, and several executives took advantage. This is a signal that those executives do not believe the stock will continue to rise, otherwise they would have wanted to hold onto the shares. While it is possible the execs elected to sell to diversify their investments, minimizing their risk and exposure to Apple performance, the investment community should not neglect this bearish signal.

It may be suggested that the executives sold their restricted shares to have more cash on-hand, and perhaps use it to make some purchases. However, COO Tim Cook received a $5 million bonus two weeks ago; in other words, he is not strapped for cash. It is not out of the question, but don’t bet on it.

2) The iPad sucks.

As Apple enthusiast and blogger Sebastien listed in his post, there are many reasons to hate the iPad, and it certainly let people down who were anxiously awaiting its presentation. Apple and its investors are optimistic on iPad sales, and in addition to its drawbacks, competition in the tablet business – the Microsoft Courier, in particular – are going to hurt iPad sales. As Apple blogger Darrell Etherington wrote, the Courier especially could compete with the iPad. The iPad may sell, but don’t expect good reviews and don’t expect it to meet the expectations of the investment community.

3) Steve Jobs could die soon.

Rumor has it that Steve Jobs is in good health, but he has seemingly impossibly overcome pancreatic cancer. Despite what his doctors and the company have said, his health is still fragile, and he is still very prone to another cancer outbreak or life-threatening illness. It is also not out of the question that Apple has not fully disclosed all the details of Jobs’s health. Jobs rescued Apple from its near bankruptcy and has been driving its innovation ever since. When Steve Jobs dies, Apple stock will fall at least 10%. Can you imagine someone else giving the quarterly Apple keynote presentations? Jobs is the life and blood of that company.

If you got into Apple early, congratulations on your successful investment. Take your gains and cash out. If you are looking to get into Apple now, you are too late. Apple has peaked, and the above reasons are factors that make Apple a risky stock to buy, as well as one likely to fall. Dump it, and cash out…if you have cash to invest, look elsewhere.