Investment adviser The Motley Fool has posted two commentaries on Apple. One suggests that Apple is "ready for a mighty big fall" because its stock has been over valued, while the other recommends Apple stock because "the company is a classic Rule Breaker, and therefore the conventional wisdom doesn't apply".

Seth Jayson writes: "Misplaced enthusiasm for the firm's nifty gadgets and a giant dose of media hype, has conspired to push the stock far beyond a rational valuation."

Not only does he think Apple's stock is overripe, he thinks it is "Stinking. Mealy, full of worms, and wholly unsuitable for public consumption."

This despite the fact that Apple's stock is currently flying high, with analysts recommending it as a good buy. Jayson explains: "When the wingtip-buffing ragamuffins [analysts] recommend an equity, that's a pretty sure sign that the hot streak will be coming to an end."

Jayson looks at the reasons why the stock is currently healthy – dismissing each in turn.

Chart topping

The iPod and iTunes may have sent Apple to the top of the digital-music pyramid for now, but he explains: "By refusing to play nicely with outfits such as RealNetworks, Roxio, and Loudeye, Apple's not only passing up lucrative licensing opportunities but also missing the chance to rocket to the front of the digital music world forever."

And, while the iPod is the current must-have music player among US teens, Jayson writes: "Just because no one else has come up with anything as nifty as the iPod doesn't mean they won't."

Jayson doesn’t doubt that the iPod is selling well. But he does doubt that those sales will translate into more Mac sales. He explains: "For 2002 and 2003, total Macintosh unit sales have been either flat or negative. So far this year, they're doing better, up 10 per cent. Sound good? Dell's unit growth is 50 per cent better, at 15 per cent.

"And industry observers have recently started to wonder whether the late launch of the new iMac and limited availability of the new Power Macs will rein in Apple's slimmer scale-up. Outside the iPod, Mac is definitely not a quick grower."

In conclusion Jayson writes: "Enthusiasm for a computer, pocket stereo, or cleverly marketed lifestyle choice is no reason for an investment. Apple's done well over the past two years, but the stock is now priced beyond perfection. For your $40 a stub, you should be getting an unstoppable business with huge growth potential. Instead, you're getting a slowing, sub-par nerd-niche operator with a shiny surface."

In defence

Tim Beyers seeks to defend Apple's stock as a good investment. Although, he starts by emphasising that: "There is no way to justify Apple Computer's price tag using traditional valuation methods."

Beyers promotes "rule-breaking investing". He explains: "One of the great Rule Breaking maxims is that to break the rules you must learn to invest like a venture capitalist. Why? Because VCs embrace risk."

How do you invest like a venture capitalist? "Find companies that take a stick of dynamite to the conventional wisdom on the way to outsized economic gains and, thereby, investment returns."

He goes on to break-down some of the "so-called conventional wisdom" used by Jayson to "prove" that Apple is not a good investment. First he dispels the idea that "you should never invest in a stock with a P/E higher than that of the overall market."

While some might argue that: "Apple can't make money charging premium prices for a commodity product," he explains: "Apple has been defying this maxim for years".

Money in music

Others might argue that there's no money in digital music, concluding that Apple is dominating a meaningless market. Beyers disagrees.

"Apple's iTunes Music Store reports more than 125 million songs sold. It's now also making money. Probably not a lot, but even if Apple collects only two thin pennies from each 99-cent download, that's still $2.5 million in profit.

"And more money is on the way: Forrester Research has reported the market for digital music will rise more than 700 per cent, to better than $2 billion, in the next three years. Were Apple to somehow drop from 70 per cent to only a 30 per cent share of the digital music downloading market – unlikely, to say the least – that would still equal $600 million in sales."

The empire strikes

Beyers thinks that the future will be good for Apple because the company is winning over the kids of today. He explains: "Jobs is building an iEmpire that is aimed at powering individuals who like to work and play hard and enjoy being just a tad digital. Does that sound like anyone you know? It would if you were in your 20s, or maybe if you had teenage kids."

The kids count. "Apple has a way of appealing to this crowd more than does Dell, iPod partner Hewlett-Packard, or IBM. And that's good news, because kids have deep pockets. That means kids who develop a liking for Apple now may have no obstacles to becoming customers for life."

It is possible to vote on which of the two sides of the argument works best for you at Motley Fool. Currently Beyers take on the matter has 53 per cent of the vote.