By Philip Elmer-DeWitt
October 10, 2012

FORTUNE — “History has repeatedly taught us that the best time to buy Apple is when the bearish sentiment in the stock has reached the pinnacle of extreme pessimism. When every guest on CNBC is calling for the imminent demise of Apple, when every headline is making a case for why Apple has peaked, and when the stock continues to slide by over a 2% a day right in the face of a market rally, that’s when you know it’s time to buy.”

That’s how Andy Zaky begins a 1,700-word polemic posted overnight Tuesday that constitutes his sixth Apple “buy” recommendation since 2006.

Zaky, an occasional Fortune contributor who now runs several hedge funds, including an Apple (AAPL)-only fund, is famous in certain investor circles for the timing and precision of these “buy” calls. At least two were made on the exact day Apple hit bottom. Four have already paid off handsomely and the fifth looks likely to do so as well. To recap:

  • July 2006 at $50-$54, with a 6-month $100 price target
  • November 16, 2008 at $88.14: 24-month $230 price target
  • August 11, 2010 at $250.19: 18-month $400 price target
  • June 17, 2011 at $320.00: 18-month $500 price target
  • May 18, 2012 at $530: 8-month $750 price target

Now, with stock trading around $630, Zaky is on the record saying that it will hit $1,000 by this time next year, if not by next July.

“The simple truth,” he writes, “is that despite all of the sensationalist rubbish surrounding the launch of iPhone 5 ranging from ‘Mapplegate’ to purple hazes or scratched iPhone cases, Apple is selling literally every iPhone 5 that it can make in what has been called the most aggressive international roll-out in consumer electronics history.

“What’s more, based on the expected smartphone growth rates estimated by IDC and Gartner, the consensus among analysts is that Apple will sell somewhere between 160 million to 180 million iPhones in 2013. This expectation is further supported by the very aggressive capital expenditures Apple has been making ahead of this international rollout as well as the capital expenditures Apple plans to make next year.”

Zaky’s fundamental argument, which he’s been making behind the paywall of his subscription-only Bullish Cross blog for weeks, is actually pretty straightforward. It’s based on the stabilization of Apple’s price-to-earnings ratio over the past six quarters — shown in the chart above.

Shortly after the 2008 market meltdown, Apple’s P/E ratio peaked at 35.87. Over the next two years, as Apple’s earnings (E) grew faster than its share price (P), that ratio got progressively squeezed until it fell below 15. Since then, the stock has hovered around a P/E level of 15 — which is roughly the S&P 500’s average and arguably too low the only mega-cap company that grows like startup.

That P/E of 15, Zaky writes, seems to be Apple’s center of gravity. When Apple’s P/E falls much below 15, the stock tends to pop. He offers last January’s Q1 2012 earnings report as an example:

“The day before Apple reported earnings, the stock was trading at a 15.4 P/E ratio. Apple reported one of the biggest earnings blowouts in the company’s history which caused Apple’s P/E ratio to fall from 15.4 down to 12.5 overnight.

“As a result of this collapse in the P/E ratio, Apple saw one of the biggest rallies in its history which aimed to correct Apple’s overly depressed valuation. The stock went on an almost vertical parabolic rally from $420 a share up to $644 in just two and a half months time.”

Apple will open Wednesday with a trailing P/E ratio just under 15 and a forward P/E ratio below 12. It’s scheduled to report its fiscal Q4 earnings on Oct. 25. In addition, according to Zaky, several technical indicators suggest that Apple’s shares are “oversold,” meaning that there’s a lot big money available to pour back into the stock.

“Apple,” Zaky writes, “is trading at a level that will likely constitute the low-end of the range for the stock over the next few months. While Apple may very well revisit these lows at some point in time over the coming weeks, it is still sitting near the low-end of the range. That’s what makes Apple an extraordinary buying opportunity today.

“Buying Apple down here at $630 a share will make any fund manager’s year. It’s an easy 60% gainer over the next 12-month period. Apple should be a top holding of the average fund, and smarter fund managers are riding this thing all the way to the bank. It is pretty much a no brainer at these levels.”

Zaky’s piece is titled “Apple $1000: Why it’s time to buy.” You can read it here.

See also: Andy Zaky is loaded for bear. Apple bears, that is.

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