So's Apple... (Article)
But I'm not saying Apple isn't doing great. I'm saying that you need to be more complete in your statements.
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Apple's Stock Off to Fast Start in 2012 with 50-Point Gain in January
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So's Apple... (Article)
But I'm not saying Apple isn't doing great. I'm saying that you need to be more complete in your statements.
This is not necessary true and often it is not. Price of any stock is set at the margin just like housing and commodity prices. A trader with clout can cause a $10 bln move to the downside or up regardless of Apple fundamental business condition or outlook. This movement will eventually, however long or short, have to revert back to what the "market" think is a proper valuation. Market capitalization is the sum total of all outstanding shares based on stock price of the most recent buy/sell order.
Theoretically, if they start paying a dividend, however small, some "value funds" and other institutional investors could start buying their stock who today might not be permitted by their investment policies. On the whole, however, companies don't start paying dividends until they leave the "rapid growth" phase. Paying dividends is essentially a way for a company to say that they can't think of a better use of that cash than whatever their investors do with it.
Meanwhile, Amazon has plunged about 9% after hours. Apparently selling all those Kindles at a loss hit their bottom line more than analysts were expecting. Whether it all works out in the end remains to be seen. It could be a bit like Apple last quarter.
AAPL valuation peaked or soon will be
IMHO, AAPL is near its peak or soon will be. And this has nothing to do with Apple's quality product, which I'm a huge fan of since 2001. Events outside of Apples control is increasingly driving demand for its products, I'm afraid. The Baltic Dry Index, a leading indicator of economic activities drop faster than we had seen in 2008-2009, since October of 2011. The world, lead by Europe is heading back into recession, consequently, Apple's earnings will be affected. It is hard to think about buying that iPad 3, when you are worry about your job security and things such as rent/mortgage, food etc.
Cinch
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Hi KPOM,
thank you for responding.
in response to an earlier poster, this is a perfect example of price set at the margin, granted this was an unusual after hour for AMZN. We see a 9% or roughly an $8 billion move to the downside in market cap. with only ~4.3 million shares traded after hours out of the 450 million shares total.
Apple's future and fortune will increasing be dictated by outside events, IMHO.
IMHO, AAPL is near its peak or soon will be. And this has nothing to do with Apple's quality product, which I'm a huge fan of since 2001. Events outside of Apples control is increasingly driving demand for its products, I'm afraid. The Baltic Dry Index, a leading indicator of economic activities drop faster than we had seen in 2008-2009, since October of 2011. The world, lead by Europe is heading back into recession, consequently, Apple's earnings will be affected. It is hard to think about buying that iPad 3, when you are worry about your job security and things such as rent/mortgage, food etc.
Cinch
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Hi KPOM,
thank you for responding.
in response to an earlier poster, this is a perfect example of price set at the margin, granted this was an unusual after hour for AMZN. We see a 9% or roughly an $8 billion move to the downside in market cap. with only ~4.3 million shares traded after hours out of the 450 million shares total.
Apple's future and fortune will increasing be dictated by outside events, IMHO.
Despite a couple down votes, my point still stands and the lead post has gone uncorrected...
After their "earnings"
Maybe Apple could do something like this guy:
http://finance.ninemsn.com.au/newsbusiness/8411984/vic-boss-hands-out-15m-to-his-staff
(I definitely could see Mitt/Newt doing something like this...lmao
)
Maybe Apple could do something like this guy:
http://finance.ninemsn.com.au/newsbusiness/8411984/vic-boss-hands-out-15m-to-his-staff
(I definitely could see Mitt/Newt doing something like this...lmao
)Bought at $40
I thought I was crazy when I held onto it as it dropped from $200 to $80.
Turns out I WAS crazy... for not buying more, as some recommended.
AAPL is still a good buy. I can see it easily being $550 within a year. That's a >20% gain... better than most investments.
I thought I was crazy when I held onto it as it dropped from $200 to $80.
Turns out I WAS crazy... for not buying more, as some recommended.
AAPL is still a good buy. I can see it easily being $550 within a year. That's a >20% gain... better than most investments.
1 point = $1
Arn was right. 1 point = $1 for stock
http://www.investopedia.com/ask/answers/04/043004.asp
Arn was right. 1 point = $1 for stock
http://www.investopedia.com/ask/answers/04/043004.asp
MacRumors... You got your terminology confused.
The stock is up 13 points in January... ($50). Not up 50 points.
Europe is a big concern, for sure. That said, Apple weathered the last recession pretty well. In some respects, it was as if September 2008 never happened as far as they were concerned. I think Asia will drive Apple's results if we do wind up in another recession. Unfortunately, China is also showing some signs of a slowdown.
Unfortunately you are wrong. Secondly, the world is led by the USA. Not Europe.
The same nonsense was said about Apple here in the US when we had our bad year and our continued recession. No one would be spending that $$$ on an iPad or iPhone. They were wrong badly.
Apple has weathered these downturns because they make products people want. If you have the money and are in the market for a smartphone, tablet or computer you are going to spend it on a quality product and that is going to be Apple. The proof is already there.
Even if there is 20% unemployment, that still leaves 80% employment which is still a hell of a lot of people out there.
I don't own any AAPL stock, but I agree with you on the upside for AAPL. If you look at 2012, here is what is coming:
Q2: iPhone 4S sales to China, iPad 3 release in USA+others
Q3: Continued iPhone 4S rollout, iPad 3 rollout to China
Q4: iPhone 5/6 release in USA
Throw in the fact that Apple may be jumping into the television market, it seems there is nothing but upside for Apple the company.
The stock on the other hand has been historically undervalued, especially when you look at the PE ratio. Investors could look at Apple going from 90% of the 55-million-strong tablet market to 70% of a 200-million-strong tablet market as a down turn. Investors are easily scared off and easily enticed when it comes to Apple -- this is because the analysts don't know what to make of AAPL.
Investors are not used to companies doing basic things like being wise with their cash, building a focused offering of quality products, providing long-term product support and achieving 90%+ customer satisfaction to foster repeat business. Apple is the premier manufacturer straddling so many growing markets, they should stand to make a whole lot of money regardless of what Wall Street thinks.
Keep in mind that Apple's Q4 from last year was registered as a disappointment by Wall Street because Apple only met, but did not exceed, analyst expectations even though they exceeded all their guidance. That's like saying an undefeated NBA team that merely wins the game but does not cover the spread does not have a shot at the playoffs. The media keeps writing stories that will keep AAPL stock undervalued. The media is looking for any sign of AAPL's downturn because they don't know how to fathom what Apple has done.
Anyway, their should be a point in time where everybody realizes that Apple is going to keep increasing profit for a while because they are selling in growing industries and emerging markets. When that happens, the stock should do a rapid catch-up (the reverse of a bubble popping). It should happen just about when AAPL has enough cash in the bank that they could afford to buy back half their outstanding shares. At the current rate, their bank account is growing faster than their stock price.
MacRumors... You got your terminology confused.
The stock is up 13 points in January... ($50). Not up 50 points.
You actually are confused...
Don't you mean, "Fortunately, you will be wrong." Be that as it may, for the last decade, Apple grew in large part at the expense of others failing e.g. RIM, Dell, HP, Nokia, Sony etc. Again Apple make great and wonderful products which I adore, but the economic conditions in Europe, Asia and America are beginning to deteriorate again.
The remaining 80% employed people in your case will see their wages stagnate and a lot of them will be fearful of loosing their jobs. Those 20% unemployed will fight for them resulting in lower wages. Consequently, spending will be curtailed even for the employed.
Yes, the world will be led by the US into an era of monumental deleveraging and economic hardship. The hyper-debt accumulation particular in the last decade has to be dealt with before we can talk of anything. The Gaurdian wrote a really good piece about the lost generation in Europe, which I just finished reading. I thought I would share.
http://www.guardian.co.uk/world/2012/jan/28/europes-lost-generation-young-eu
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You sound like David Lereah formerly head of the National Association of Realtors in 2006 and Lawrence Yun also head of NAR, currently. It is all the media's fault man! I guess it's time to write a put option on AAPL with expiration ~12/2012?
Cinch
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Stop.
MacRumors... You got your terminology confused.
The stock is up 13 points in January... ($50). Not up 50 points.
In theory, the word "point" is used in reference to dollars, not percentages, but few, if any, people uses "points" to describe stocks on a daily basis. Its cents, bucks, and percents.
Stop what? There is a difference between the value of common equity and the enterprise value of a firm. It's an important difference and, when people are reporting financial news, the distinction should be made. What are you trying to say?
I have no clue why my original post has -6. It's factual with absolutely zero opinion and it gets down-votes and people quoting it saying "stop".
@Badandy,
If there is any consolation, I voted up on the #45 post which is yours. You must understand or sympathize that this blog is not a financial blog. The public at large assumes market capitalization is the same as "value". The value of a company to society is rather difficult to measure, if not impossible. But again most people equate value to stock price.
If there is any consolation, I voted up on the #45 post which is yours. You must understand or sympathize that this blog is not a financial blog. The public at large assumes market capitalization is the same as "value". The value of a company to society is rather difficult to measure, if not impossible. But again most people equate value to stock price.
True, but under the shareholder value theory, if the goal of a company is to maximize shareholder value, then market capitalization is more relevant than enterprise value.
Anyone who looks at apple from a statistical point of view is a flat out moron, and has no business investing in the stock market.
Keep making me money, Apple
Keep making me money, Apple
I often wonder whether the average "investor" (I use this term loosely here, because most people do not fit Graham's definition of an investor*) actually understands the various methods for valuation and which ones are bogus and why.
I pointed out in another thread that to say that AAPL has a way to go because its PE ratio is 12:1, this is not really a good measure of anything and here's why.
The companies that people often compare Apple to, which may include Amazon and Google, are trading at 13 to 19 times earnings. But two things:
1) P/E ratio doesn't tell you what a company is worth. It tells you what every other idiot was willing to pay for it. There is no logical correlation between earnings and stock price, other than what speculative activity causes it to be... and it could be anything. If, let's say, everyone paid 500 times book value for every tech stock out there, should you? So what else is P/E Ratio telling us than how many more times actual cash generating power did people foolishly pay for a stock?
2) Apple has 932 million shares outstanding, and Google and Amazon both have about a third of that. Apple also does about three times Amazon's and Google's revenue. Given the rapid growth Apple has had, what do you think is happening to their available pool of customer market share that they don't already own, which to go after? It's shrinking. As Apple scales up, there's greater downside risk. And now they're the most valuable company in the world, with the highest growth in PC sales, the #1 smartphone manufacturer.
If you use fairly reasonable estimates giving them double digit growth for the next five years on a shrinking scale, then tapering off to a terminal growth rate by year 8, their enterprise value with ten years of forward operating cash flows factored in, discounted to net present value, is about $375.2 billion, or about $50 billion below their current market capitalization.
The tangible book value of Apple is about $18.25 a share, by net working capital (a metric Buffett has used repeatedly, and it seems to have worked out rather well for him). I don't count property, plant and equipment because it doesn't matter how big your offices are or how many gold toilets you have... the cash generating engine of a manufacturer like Apple rests in its inventory, and the generated cash is operating cash flows, not total cash flows, and certainly not total earnings (an income statement item that doesn't actually tick and tie to every widget sold).
So, when it comes down to it, factoring in the most recent earnings data, Apple's current intrinsic value is really about $420 per share.
M&A experts and analysts who quote you $450 to $550 for Apple use a triangulation of methods including DCF analysis and industry P/E multiples to arrive at what they think is fair market value. But I throw out P/E multiples precisely because they do not tell me what an intelligent investor SHOULD pay for a company. And analysts are in the business of hyping up stocks so they can keep their High Net Worth clients, off whom they collect management expenses, very rich.
My goal as an investor is to find a margin of safety, and pay somewhere below intrinsic value. It'll happen. It certainly has with Apple. Occasionally downward market fluctuations will temporarily underprice a company whose operating performance has not changed one bit. But if the market is capable of being wrong at that time, it's also capable of being wrong right now in the other direction.
The truth is, I've had as good or better performance this past year with value investments than taking the roller coaster ride of Apple which would have generated 21% return, nothing to balk at, but with considerable uncertainty and unnecessary excessive risk. A lot happened. Steve Jobs died... that could have gone the other way for Apple's stock. That's not as shrewd as say, finding a farm equipment company (true story) nobody is hyping up, and making a 40% gain on it in a year when some of the biggest hedge fund managers are losing their clients 48%.
I'm not saying Apple's stock will absolutely not go to $550. But so what if it does? EVERYONE is riding that roller coaster, and when everyone is on a stock that generally lends credibility to my assessment of it being overpriced (I'm a business analyst by the way, I measure real performance from within the company, based on actual inputs affecting cost and revenue, rather than making half-blind predictions from outside in order to sell financial instruments/services).
It doesn't tend to be the case that the most hyped, most oversubscribed stocks, are underpriced by the market... that defies common sense as well as my analysis.
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Anyone who looks at apple from a statistical point of view is a flat out moron, and has no business investing in the stock market.
Keep making me money, Apple
Statistical, yes. Fundamental? No. Read "Security Analysis" by Graham and Dodd... most brokers (read: not qualified to analyze my checkbook) and day traders (read: habitual gambler without a clue about business valuation) will tell you to stay away from it, but it seems to have worked out just fine for the likes of Warren Buffett, Walter Schloss, Jean-Marie Eviellard, and several other billionaires who subscribe to the value investing philosophy.
So-called "technical analysis" (i.e. trying to predict the future of the chart by analyzing the past of the chart, rather than what real world inputs CAUSED the ticks on the chart), which pipsqueak day traders (not one of whom will ever be a billionaire) swear by, is total b.s. But think about it: For a company whose shares are roughly 70% institutionally owned, you don't think that those fund managers didn't sit down and do the math an M&A expert would to arrive at a realistic calculation of what a smart person would actually pay for the company, as opposed to every moron who plays the market like it's a casino?
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That's the equivalent of saying that "this painting is worth $5,000,000 because that's what I chose to pay for it." Contrary to what people think, the market isn't really a good sounding board to tell you what you should pay for an asset. People in groups are idiots. If you want to get ahead of them, shouldn't you pay less than they would for the same asset... and then sell it to the moron dumb enough to pay more than you did.
* "An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative." - Benjamin Graham
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I am actually very surprised that AAPL is up at its all time highs, especially after they reported their financials. Usually, AAPL will see a spike in share price after earnings then a dump in the days and weeks following then a climb back up to the highs.
As I've been trading in the past week and monitoring my positions, I can't help but notice that AAPL is continuing to break its resistance and gain new support levels. I was even more surprised to see that AAPL opened way ahead, broke, and set new all time highs today. In short, this is unreal. Here's to hoping that the trend continues!
*Full disclosure, I day trade and currently holding a long position in AAPL (glad I didn't sell the day after their earnings)*
As I've been trading in the past week and monitoring my positions, I can't help but notice that AAPL is continuing to break its resistance and gain new support levels. I was even more surprised to see that AAPL opened way ahead, broke, and set new all time highs today. In short, this is unreal. Here's to hoping that the trend continues!
*Full disclosure, I day trade and currently holding a long position in AAPL (glad I didn't sell the day after their earnings)*