Once the most valuable company in the world, Apple (NASDAQ:AAPL) stock dipped below $400 this week to bottom out at its lowest levels since 2011. Yet as shares of Apple continue to free-fall, the stock's valuation becomes increasingly more attractive. The stock is currently trading at just nine times earnings, well below the market average of 15 times earnings.

From a valuation standpoint, this means Apple stock is trading at its cheapest level in at least 10 years, according to The Wall Street Journal.

Why you want to own it
The stock looks even better when you consider Apple's balance sheet, which boasts zero debt and more than $137 billion in cash and investments. And we can't forget the stock's 2.6% dividend yield. Better still, the company's massive cash reserves mean there's plenty of room for dividend increases or stock buybacks in Apple's future.

Sure, Apple may be transitioning from a growth stock to a value stock. However, there haven't been any adverse changes in the company's underlying fundamentals that would justify the sharp declines in its stock price.

For example, the most recent sell-off in Apple stock came after one of its chip suppliers, Cirrus Logic (NASDAQ:CRUS), issued a weak earnings forecast for its fourth quarter. Analysts immediately speculated that the chip maker's forthcoming earnings weakness might be due to soft demand for Apple's iPhone 5. However, until Apple reports its quarterly results next week, this remains highly speculative.

Greedy when others are fearful
Of course, the gloom and doom surrounding Apple isn't without merit. Some analysts worry that Apple has stopped innovating, which could be problematic for the company as its products get commoditized and profit margins deflate. Increased competition from Samsung in the mobile arena is also worrisome.

While these concerns are valid, I think the panic in Apple stock is overblown. Apple still makes some of the best products in its product categories. In fact, the iPad now commands a whopping 82% of the tablet market, according to Forbes.

Looking ahead, Apple should continue to benefit from its position in the fast-growing mobile industry. In fact, "of the 1.8 billion mobile phones to be sold in 2013, 1 billion units will be smartphones, compared with just 675 million units in 2012," according to Gartner. Therefore, Apple's profits should grow alongside the broader smartphone market, despite increased competition from industry rivals.

Nevertheless, Apple's stock continues to be punished as investors sell into the panic. To be sure, Apple stock has lost more than 25% of its value year-to-date to where it trades at around $390 per share. At the stock's current valuation, I think this creates a buying opportunity for long-term investors with a stomach for volatility. Ultimately, I believe most of the risk is priced into Apple stock at this point.

Fool contributor Tamara Rutter owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Cirrus Logic. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.