Are Apple (AAPL) Shares In Perpetual Purgatory?

After rising 147 percent in 2009 and 53 percent in 2010, shares of Apple (Nasdaq: AAPL) are up a measly 4 percent this year. Shareholders are frustrated to say the least.

Despite reporting another blowout quarter on April 20th and trading at a multiple a deep value stock would enjoy (12x next year), the stock is stuck in neutral with no signs of returning to the glory days. The blah trading can be attributed to a number of concerns.

Maybe the top recent concern is supply constraints for the iPad. While demand for the device is heavy with a "mother of all backlogs", supply shortages still exist and could be costing the company dearly. The shortages come as competitors almost daily release their own version of the tablet. While these competing devices are mostly inferior - if a customer wants an iPad but can't get one, a competitor's product is readily available. Now that this consumer has forked over money for a competing tablet they will put their iPad ambitions in the rear-view mirror. If this is the case, Apple losses an immediate sale and may not benefit from the Mac "halo effect" the company has enjoyed.

Another overhang on the stock is Steve Jobs' health. While the iconic CEO appears in better and better health, he formally remains on medical leave and his departure from the company in the next 1 - 5 years is seen as a given. Apple's Tim Cook has done a fine job filling in and has gained some Street cred. Nonetheless no one can fill the shoes of Steve Jobs and while much of the eventual news is priced into the shares, traders still fear a 5 - 10 percent sell-off when he does step down.

There are also fears that the stock is simply over-owned and there is no one left to buy. The market cap of Apple is $310 billion, or 2.6 percent of the total market capitalization of the S&P500. This is a level some fret about.

Investors are also disappointed that the company hasn't been able to find a good use for its $66 billion in cash and equivalence. While the $70 per share in cash provides a nice comfort level for holders, with minimal return on the cash, investors feel ripped off.

Since Apple has been on its tremendous run it has always been about the "next big thing". When they first had success with the iPod, investors looked forward to the iPhone. When the iPhone was the driver, shareholders could look toward the iPad. Now with iPad, investors are asking "what's next?". All that anyone has been able to come up with is an Apple television-type product. According to speculation, this upcoming product will not be the current Apple TV unit, but a full standalone TV. Investors don’t appear too excited for this new product. Maybe once the company formally announces the unit and sheds some light on the potential investors can get behind it.

Apple will be hosting its Apple Worldwide Developers Conference from June 6 - 10 this year. Investors are hoping news from the conference will give the stock a much-needed new catalyst.

So while Apple continues to trade in perpetual purgatory investors will hope and pray that a driver for the stock can bring back its heavenly gains.

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