Apple Stock Falls Under $90 (AAPL)
The stock's trailing P/E ratio is now 17X--still above the market's, but low for a stock with this wide and passionate a following and a still-solid growth story. Thanks to the iPhone's attractive cash-flow characteristics, moreover, the stock is now trading at just over 10X trailing free cash flow after factoring out the company's cash balance.
A few weeks ago, when we noted that Apple's stock had fallen 33% off its high, we suggested that, if market conditions deteriorated further, the stock could drop to $70. It obviously still could. In the old days, 10X-15X was considered a reasonable P/E multiple for a hardware manufacturing firm, even one as sexy as this.
Apple is also obviously exposed to the global slowdown, and its earnings will likely get hammered over the next year. Also, as illustrated by the market's temporary panic over a Steve Jobs heart attack report, the company needs a succession plan.
But that said... most of what people about Apple when the stock was $180 still holds true. As Warren Buffett has said many times, the best time to buy stocks is when others are fearful. Apple investors, like other stock-market investors, and close to panic right now.
See Also:
Apple Denies Steve Jobs Heart Attack Report
Apple Announces 33% Off Sale!
Microsoft's Real Problem: The Second Coming of Apple
$24 cash per share, healthy FCF, high return on capital, huge growing brand quality.
Apple is looking very attractive for a long term buy.
The periodic analysis of tech stocks is great, but it would be especially helpful if you had one post (or even a widget that updates real time) showing where all the major tech stocks are trading on a PE and price-to-cash flow basis. I know you can dig around and find these details elsewhere, but given SAI's focus, it seems like a natural fit.
Thanks.
H
This is fucking great.
Im about to take out a $50,000 loan on my house and dump that shit in Apple
AAPL 4:00PM ET 97.70 Up 0.63 Up 0.65%
Day traders could have made a few bucks...
Apple didn't miss a quoter in 5 years! Dell and Microsoft will see a slowdown since Apple is eating their lunch.
If you accept that FY08 for aapl was mainly non-iPhone revenue, then that means $5/share came from mac/ipod/ITMS.
Even if they just hold flat on non-iPhone business (and remember, Mac business has been growing minimum 30%+ YOY recently thanks to excellent products and poor Vista offerings), that's a $6.50-$7 EPS for FY09...or 30% upside or more in earnings.
So, with a very wimpy and "recession-oriented" trailing PE of 15 + $20/share in cash on hand and no debt, there has to be at least 25-30% upside in the stock from here in the next 12 months. There could be a whole lot more...
low $80s is a key technical retracement level--if it reaches that level as it almost did today, this stock is a screaming buy from many vantage points.
And Mac growth, which is actually more important.
Beltway Greg
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