Apple Is Still Undervalued

• Report this Comment On January 26, 2012, at 11:40 PM, pabsy wrote:

  your wrong on the appl pe, it has not been adjusted in a lot place yet, yahoo for example, its closer to 11

  regards

• Report this Comment On January 27, 2012, at 12:20 AM, ConstableOdo wrote:

  I'd really like to meet and talk with these jackass skeptics who are running Wall Street and talking down Apple like that. I'd really like to know who they are and what stocks they're putting their money into. Netflix? Intuitive Surgical? Priceline? Amazon? It's OK if they're putting money into those stocks, by I'd like to know how they can tell the future, three years from now. Three years ago, they said that RIM was going to be the mobile smartphone champ for many years. They were dead wrong.

  I'd like to know if these investors are hedge fund managers because those jackasses cannot be trusted with controlling Wall Street properly or honestly. If they dislike Apple so much then maybe they should be taking their money elsewhere instead of bogging down the share price for individual shareholders like myself. Unless they're prophets, hedge fund managers are not qualified to claim they know anything about Apple's future growth potential. Any company can have unsustainable growth. Things change all the time. I just wish they'd stop betting against Apple because of the unforeseeable future and focus more on fundamentals and current earnings.

  How the hell can they honestly say that Apple's dominance will soon fade? Are they saying the same thing about America's dominance, too.

• Report this Comment On January 27, 2012, at 12:26 AM, InfoThatHelp wrote:

  Apple already has close to $100 Billion in cash, why would Apple want more equity?

  Assets = Liabilities + Equity.

  Apple does not need or want more equity, Apple is one of the rarest of companies that has reached a stage where the net profits Apple generates makes it illogical for Apple to increase its equity. Apple cannot help but see its stock rise ever so steadily. In an ideal world, Apple should stop selling stock and just concentrate on increasing its phenomenal cash ledger which acts as its own banker to fund the various hugely successful projects.

  Apple would be wise to keep the greedy investors out from the Apple equity. In a way, Apple is doing just fine the way it is.

• Report this Comment On January 27, 2012, at 9:49 AM, artlaz wrote:

  Apple's P/E as of this writing is 12.7. Adjusting for cash, it's 9.7. Forward, based on $45 EPS in C2012, it is 7.6.

• Report this Comment On January 28, 2012, at 3:27 PM, catfishpoboy wrote:

  Those of us who were Apple fans from back in the days when an Apple product meant a desktop computer with a Motorola processor see very clearly what more recent followers don't--that there is a huge market ahead thanks to all of the corporate desktops all across the world littered with Dell, HP, and Compaq computers running Windows. While analysts ask how much longer Apple can rule the mobile phone or tablet space fail to consider how much growth Apple can enjoy by selling iMacs, or an iOS-driven next generation iMac, to corporate America.

• Report this Comment On February 02, 2012, at 9:25 PM, MHedgeFundTrader wrote:

  Apple has become a monster cash flow generator. Apple now has the envious problem in that sales of several of its products are going hyperbolic at the same time.

  Apple announced net profits of $13.06 billion, or $13.87 per share, up 11% from the previous year. If the company just maintains that rate for the rest of the year, it will generate $55.48 in earnings, which at the current 11.5 multiple should take the stock up to $638, up 40%. If Apple makes it up to a market multiple, the stock should rise to $721, a gain from here of 58%.

  If the multiple expands to its pre-crash average of 35 X, that would take the stock to a positively nose bleeding $1,941, giving you a 424% return from current levels. Then the company would be worth $2.8 trillion and rank 5th in the world in GDP, more than France, and just behind Germany. Wow!

  It all reinforces my view that Apple shares will reach my long term target of $1,000 sooner than anyone thinks. Long term readers are well aware that I have been making this call for the past two years back when it was trading at a lowly $240. More recent subscribers will also recall that I predicted that Apple would be the top performing technology stock in my 2012 Annual Asset Class Review.

  I'm not saying that you should rush out and load up on stock today. But it might be worth taking a stake on the next wave of fear that strikes the market.

  The Mad Hedge Fund Trader

• Report this Comment On March 31, 2012, at 3:09 PM, ade61 wrote:

  If apple stock isn’t overvalued, why are so many fairytales written to justify its price which appears to be in a bubble stage considering its $254 billion increases in capitalization in the last year. The assumptions made why apple stock is undervalued are unbelievable.

  Forecasting future earnings from historical trends are not always accurate, especially when the data is suspect. It was not long ago the herd believed that house prices could never go down but would continue to increase rapidly year over year.

  Just as the apple cheerleaders believe its stock price cannot decline, but will continue to increase. Many analysts quote Apple’s sales potential growth rates to be 20% or more annually for the next five years to justify why its current share is undervalued.

  Rarely, is apple net income ever mentioned. Apples net income from the past five years, from 2007 to 2011 is approximately 56.5 billion. A major jump in sale and income came in 2010 to 2011 when its net income increased by 11.91 billion.

  Apples Net income

  2007 3.50 billion Net Income growth .

  2008 4.83 billion 38.27 %

  2009 8.24 billion 70.36%

  2010 14.01 billion 70.16%

  2011 25.92 billon 84.99%

  What is never asked is how a company with a net income of 25.92 billion in 2011 can have achieved capitalization of 565.9 billion. Apple’s unsustainable income growth is beginning to slow, but this does not stop its promoters from developing deceptive forecast about Apples future growth citing its relatively low market share of worldwide computer, Smartphone and Tablet sales.

  One must ask who is paying these analysts for these deceptive forecasts. Could it be the herd on Wall Street that has mortally damage the US Economy by all the financial instruments which were developed, supposable to limit risk, but were merely another device which allows them to hedge their bets and steal.

  I am not surprised that the 70% of Apple’s stock is owned by institutional investors which have created another bubble as there are limited investment alternatives. Apple stock was primed for this collusion, due to it past growth and the difficulty in evaluating its most important characteristic which is the marketing of its products.

  This is an intangible asset akin to Goodwill which is very difficult to evaluate There is a reason, Apple’s sales are less than its competitor and that is due to their products considerably higher cost , which in many cases are functionality no better than their competitors.

  I remember my first computer cost over S2500. Today, a superior system can be bought for less than $400. This directly related to Apple’s value and alleged income growth potential. Just as computers, big screen TVs and many other electronic devices have been commoditized, so will apple products if they wish to capture additional market share and stay competitive.

  It is not likely Apple’s can continue to increase its net income by 85% a year or for that matter by 20% a year for the next five. Apple’s 2011 net income was approximately 26 billion. This is a massive amount of money. An increase of 20% equals 5.2 billion gain in net profit. This buys quite a few Ipads, downloads and other apple products.

  Really, how more Ipads, Ipods and other Apple products can the market absorb without a significant cut in their price.

  In addition, the more affluent market have been saturated with apple products, leaving the less capable market the task of buying all though millions products which are forecast to be manufactured and sold by apple in the coming years.

  Essentially, a cut in pricing will affect Apple’s bottom line, which is net income. Net income is very useful in determining an asset or company value. In addition, the use of net income is a more accurate than utilizing earnings with manipulated PE ratios to determining a value.

  It is very likely Apple’s net income will stagnate, due it considerable size, competing products and the fact it will have to lower its pricing to achieve significantly more market share.

  Apple average net income over the last 5 years is 11.3 billion. This income average would typically be utilized to estimate a value. But let use apple’s most recent report net income which is 32.98 billion. If a capitalization rate of 10% is used Apple’s value can be estimated by:

  32.98 Billion / .10 % ≈ 323 billion.

  Now a price share can be determined by dividing the outstanding share which is approximately 932 million into 323 billion.

  323 billion / 932 million = $363 per share

  This is a more realistic value for Apple’s as its past growth is not sustainable nor is a significant increase in it net income likely. How did Apple’s capitalization increase by 254 billion over the last year, the majority of Apple's capitalization came from Hedge funds and Money managers who have driven apple stock price to an irrational level s due to their herd likely mentality.

  It is not surprising that apple now is offering a dividend and is buying back its stock so that it can keep the stock price artificially high. But why are they waiting till September to begin the buy back. Maybe, their analysts see a drop coming and can acquire more shares for the reported 100 billion buy back... You know Apple is very innovative.

  Maybe, Apple stock price can maintain this level for a period time, but it very likely it can’t because its price has been inflated by Speculators that created another Bubble which will eventually hurt the uninformed and possible many retirement funds.

  My analysis indicates apple current capitalization is overvalued by approximately 200 billion. My advice is to sell apple stock now as it current capitalization is based on intangible asset, and improbable income growth rates.

  For all the Dimwits that have recently purchased Apple stock my condolence.

  I know my comment will probably fall on deaf ears, but at least I made an effort to bring another perceptive on Apple’s irrational stock price.

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