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Apple: An Undervalued Cash Cow

By Daniel Sparks and Erin Miller - Apr 7, 2013 at 12:05PM

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Measured by this metric, Apple looks irrationally cheap and awfully enticing.

One of the simplest, most straightforward ways to quickly value a stock is by the free cash flow yield. Similar to the dividend yield, the higher this metric, the better. Turns out that Apple's (AAPL 3.09%) yield is considerably and almost irrationally high, especially compared to other stocks in its sector like Intel (INTC 1.60%) and Microsoft (MSFT 2.17%) -- two companies plagued by declining PC sales.

In the video below, Fool contributor Daniel Sparks discusses with Fool.com's Erin Miller exactly why he thinks Apple's high free cash flow yield could mean that Apple is irrationally cheap.

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Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$148.22 (3.09%) $4.44
Microsoft Corporation Stock Quote
Microsoft Corporation
MSFT
$271.66 (2.17%) $5.76
Intel Corporation Stock Quote
Intel Corporation
INTC
$44.17 (1.60%) $0.69

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