"You're taking a big risk with that multiple, and ... the way you really need to think about investing is risk reward," he continued.
Niles also weighed in on the Apple vs. Samsung competition for great smartphone market share. Last year, Samsung picked up market share while Apple's portion of the smartphone market remained nearly flat.
"When the iPhone first came out, it was the only one that could do what it did," he said. "Today, I would argue that Samsung makes a better phone."
(Read More: Samsung Takes on Apple With New Galaxy S4)
Although he didn't go so far as BlackBerry CEO Thorsten Heins did in labeling the iPhone as "dusty," Niles did say it's not the best phone on the market.
One challenge for Apple is that its phones are sold in fewer countries than the Samsung Galaxy. The iPhone's higher price poses another problem. Near term, Niles does not think a lower-priced phone is in the cards for Apple.
But he did predict it will launch something in the TV space before year end, a product that he said hopefully will not be just a set-top box or an Apple TV improvement but rather an actual television. He also said he thinks the company will issue a buyback or dividend increase at some point soon. (Read More: Apple to Make 'Dramatic' Move: Pro)
—By CNBC.com's Katie Little; Follow on Twitter
Additional News: Samsung Takes on Apple With New Galaxy S4
Additional Views: Apple About to Make 'Dramatic' Cash Move: Pro
Disclosure information was not available for Dan Niles.