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Don't panic! No worms in Apple stock

October 9, 2012: 4:00 PM ET

Investors are acting like Apple's stock is now rotten to the core -- even though the company has already had two corrections in the past 12 months.

The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, La Monica does not own positions in any individual stocks.

Apple (AAPL) has taken a bit of a stumble on Wall Street lately. Now, investors need to figure out whether it's a great buying opportunity or if this is the beginning of the end of Apple's fabulous bull run.

Shares of Apple have now fallen 10% from their all-time high of $705.07. The stock dipped slightly Tuesday, making it the fourth consecutive down day for Apple.

This could just be a healthy correction for a stock that has surged past the $400, 500, $600 and $700 milestones in just 15 months.  However, investors have legitimate reasons to be a little worried that a worm might be growing inside Apple.

For one, consumers and critics did not fawn over the new iPhone 5. Far from it.

Apple was roundly criticized for its new Maps app, with many people preferring the previous map from Google (GOOG) that was bundled into Apple's iOS. There were the predictable cries about how the late Steve Jobs would not have allowed such a bug-ridden product to hit the market.

But perhaps more shocking (and potentially damning) are the complaints about Apple's Lightning adapter, which many consumers were forced to buy in order to connect their latest iPhone to older accessories like speaker docks, chargers and alarm clocks.

Related: Comprehensive coverage of iEverything in Fortune's Apple 2.0 blog

Apple is now in the unusual position of being perceived as yet another Big Business that will stop at nothing to squeeze every penny it can from its customers.  The days of Apple as the plucky David of Silicon Valley doing battle with the monolithic Wintel Goliath are long gone. Apple is now viewed by some as the proverbial Man, while Microsoft (MSFT) and Intel (INTC) are the underdogs.

So is the stock now to be avoided? Personally, I think that the NaviGate and AdapterGate problems will soon pass. Remember the kerfuffle over the iPhone 4 antenna? That was a short-lived controversy.

Nobody should be surprised that Apple shares are taking a breather. I wrote back in August that "investors can be unforgiving. The one major negative that comes with being a stock that just about everybody loves and owns is that everybody might be quick to head for the exits if Apple ever stumbles." I followed that up last month by saying that "as Apple's stock climbs higher and higher, it's harder for new products to immediately move the needle."

That appears to be what's happening now. Apple proved it is fallible. Investors realize that it's going to take something truly new and revolutionary -- and not just the fifth (or sixth, if you count the iPhone 4s as more than a mere incremental upgrade) iteration of a now five-year old product line -- to excite Wall Street again.

Will the rumored iPad Mini, which may be unveiled this month if the chatter about an imminent invitation for another special Apple event are correct, be the product that restores the sense of magic and wonder usually associated with Apple? Perhaps. At the very least, it's something for Amazon (AMZN) to fear, since a smaller iPad would clearly be an assault on the bargain price tablet niche that Amazon has carved out for itself with the popular Kindle Fire.

But it's more likely that some sort of iTV will be the device that truly becomes Apple's next game changer.

Still, even as we wait for the iPad Mini and a possible gizmo that changes television as we know it, it's also important to remember that despite all the widely publicized flaws of the iPhone 5, consumers around the world are still scooping them up like, well, iPhones.

Apple will release its next quarterly earnings report on October 25. Analysts are predicting that Apple will report a more than 25% jump in earnings per share from a year ago on the back of a nearly 30% year-over-year increase in sales. Estimates for the next quarter -- as well as the fiscal year ending in September 2013 -- have started to creep higher as well, after analysts may have overreacted and cut forecasts too sharply in July after Apple's last earnings report.

As a result, Apple's stock is once again looking reasonably priced, trading at 11.8 times fiscal 2013 earnings projections. Apple had been valued at 13.5 earnings estimates for next year at its peak $705 price.

Related: Apple's biggest apologies

This is not a reason to panic. Pullbacks in hot stocks are to be expected -- and they are healthy. The sense of alarm about Apple's stock slide is even more comical when you consider that this isn't even the first time in the past 12 months Apple has "corrected."

There was almost a mini-Apple bear market this spring. After Apple hit a then all-time high of $644 on April 10, the stock then tumbled 19% to $522 by May 18 thanks to concerns about a slowdown in the global economy. (Sound familiar?) And shortly after the iPhone 4s hit stores in mid-October of last year, Apple's stock fell nearly 15% over a seven-week stretch from a then-peak of $420.70 to $363.32.

The lesson here? Investors who sold Apple at any point during those previous two Apple slumps missed out on a much bigger run in subsequent months. Sure, Apple will eventually top out. But I doubt that the stock has already peaked.

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