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Apple: The Most Undervalued Large-Cap Stock in America - Page 2

post #41 of 214
Apple may be undervalued, but it looks like it's going to be more undervalued moving towards the new year. Nothing seems to be stopping Apple's continued share price drop. No matter how good a quarter Apple has, it's well assured that Apple's share price will not return to former levels. It's too late for that this year. Wall Street has already given Apple up for dead along with the late Steve Jobs.

Wall Street is betting that Apple has no future but I'm rather curious about what consumer computer/tech company Wall Street claims does have a future. Dell? H-P? Acer? Lenovo? They all appear to be falling by the wayside and yet Wall Street is still betting against Apple's future. It doesn't make a bit of sense to me. Does Wall Street really believe that Microsoft and partners are going to easily rise again to strike Apple down? I think Apple will continue to make it harder for individual companies to go against them and still be profitable. Apple can easily afford to grab up all components in advance so that the competition is left with table scraps.

Apple continues to open more stores, sell more products, reap higher revenues and profits in a weak economy and yet the share value continues to fall. How can one company be running that strongly and still can't manage to hold ground in value? Wall Street's tossing away the value of fundamentals is absolutely criminal. As was mentioned earlier, Wall Street seems to operate like some Las Vegas casino. What's also puzzling is when Steve Jobs was alive, there was his health and succession plans holding Apple shares down. Now that Steve Jobs is dead, the doubt of future innovation without Steve Jobs is holding Apple shares down. It appears to be an unsolvable no-win situation for Apple investors. As an Apple long shareholder, I've pretty much given up hope of Apple getting any respect from Wall Street no matter how much revenue Apple earns.
post #42 of 214
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Originally Posted by cameronj View Post

Sound like someone has margined his apple shares and is getting nervous.

It doesn't look like they are.
post #43 of 214
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Originally Posted by Asherian View Post

It's really simple. You don't buy a stock based on what it did in the past or even what it did today. You buy a stock for its future performance.

It's quite obvious that the market doesn't have much faith in Apple without Jobs, and the underwhelming launch of the iPhone 4S didn't help. And yes, I'm well aware of the spin of the fastest selling iPhone ever -- a complete miracle considering it went on sale in far more countries the first day than the iPhone 4 did.

The percentage growth rate AAPL has been on has been stunning, to be sure. But the low P/E indicates that the market, as a whole, thinks the ride is over and that kind of growth is not going to continue. Especially sans Jobs.

Statistically, AAPL is undervalued for its current earnings. No doubt. But I know a great many people who now won't touch AAPL stock.

I agree with you that you buy stock based on future performance. But doesn't past performance give a clue of future performance? Would you buy stock in a company that released quarter after quarter of sucky earnings? The only reason you would buy is if you were very sure the company would post a profit later on.

Apple was undervalued even when Jobs was alive. And the iPads that people are buying today are the same iPads that people were buying when Jobs was alive.
post #44 of 214
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Originally Posted by ronstark View Post

What I am about to say isn't new but its important to add...

The analysis of Apple's stock and valued perforance was, in this story, fantastic.

I would VERY much like to have the same author work equally as hard on analysing WHY Apple's stock is being "ignored".

Do some fear an Apple bubble? Or does Apple care at all? IF Apple continues to perform and out-perform as it has in the last 4 years, and IF their cash base continues to grow they could start buying back their shares, no? Then what?

I would like to know the WHY and HOW if this WHAT subject.

Thanks.

I was aware of much of this, but not all, and when stacked together this way, it is breathtaking. I don't like to engage in conspiracy theories, but I can't help but get the feeling that either somebody of institutional size wants into apple in a big way, or they are shorting and cheating. The phenomenon is undeniable.

The numbers do not lie. Parse away Zaky's glowing opinions all you want, his numbers don't lie. You can not argue the facts.
post #45 of 214
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Originally Posted by vvswarup View Post

I agree with you that you buy stock based on future performance. But doesn't past performance give a clue of future performance? Would you buy stock in a company that released quarter after quarter of sucky earnings? The only reason you would buy is if you were very sure the company would post a profit later on.

Apple was undervalued even when Jobs was alive. And the iPads that people are buying today are the same iPads that people were buying when Jobs was alive.

Apple investors are waiting for the *next big thing*. All of the great revenue generators have already been released, and, therefore, blessed by the great Jobs while he was still alive. Stock price is about the future. Wall Street needs to see a great new iPad 3, a great new radically refreshed iPhone and the next sales growth generator......the new, non-hobby AppleTV.

The product pipeline has already been laid for the next 5 years, IMHO. Wall Street and investors need to see those future products and have them light the world on fire, like is expected of Apple, before they jump in head-first again. Until then, they'll only be getting their toes wet by very conservatively following Apple's sales revenue dollars (and margin) with their investment dollars....hence the current P/E compression.

My 2 cents.

EDIT: The stock has been undervalued ever since Wall Street had the prospect of Apple without Steve Jobs in the back of their mind, which has been fueled by the health rumor mill for many, many years......since the 'C' word was brought to light.
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post #46 of 214
Quote:
Originally Posted by AppleStud View Post

I agree the stock is completely undervalued, as the article points out again, and again, and again. And as anyone who is so inclined can see for themselves if they analyzed Apple's 10q/k's (tip of the hat to Andy for doing the extensive amount of legwork, though).

I'd be much more interested in a discussion of just WHY apple is so undervalued and why the CNBC-types are so useless (the story that iPod sales are slowing is a tragic miscarriage of journalism and the reporters / producers of that segment should be fired). So, why are they so bad? Why is the stock so undervalued?

Possibly the wall street guys still use windows and blackberrys.
post #47 of 214
There is no "bottom" to PE compression (or PEG compression for that matter). Apple's cas will be impacted by their new campus and other strategic investments. The current PE of 8 sans-cash could be viewed as 10% growth after marginal risk/interest requirements over 6 years.

All this said, still long AAPL, although I need to diversify.
post #48 of 214
Quote:
Originally Posted by eddierite View Post

What's this based upon? Most of the data is Apple w/ Jobs. And if you're counting medical leaves, AAPL has hit all-time highs in share price w/out Jobs as CEO, as in 2011.

Jobs was still alive for most of 2011. Now he isn't.
post #49 of 214
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Originally Posted by Lisamacnewton View Post

Troll much?

Idiot. Do you have an actual response to this person's claims, are you just trolling yourself, or do you believe that every opinion which runs counter to yours is a personal attack (in which case, please get over yourself) !!
post #50 of 214
But if Apple doesn't pay dividends, what do sales and earnings have to do with stock price? Stockholders aren't getting a dime of that money.
post #51 of 214
Quote:
Originally Posted by Constable Odo View Post

Apple may be undervalued, but it looks like it's going to be more undervalued moving towards the new year. Nothing seems to be stopping Apple's continued share price drop. No matter how good a quarter Apple has, it's well assured that Apple's share price will not return to former levels. It's too late for that this year. Wall Street has already given Apple up for dead along with the late Steve Jobs.

Wall Street is betting that Apple has no future but I'm rather curious about what consumer computer/tech company Wall Street claims does have a future. Dell? H-P? Acer? Lenovo? They all appear to be falling by the wayside and yet Wall Street is still betting against Apple's future. It doesn't make a bit of sense to me. Does Wall Street really believe that Microsoft and partners are going to easily rise again to strike Apple down? I think Apple will continue to make it harder for individual companies to go against them and still be profitable. Apple can easily afford to grab up all components in advance so that the competition is left with table scraps.

Apple continues to open more stores, sell more products, reap higher revenues and profits in a weak economy and yet the share value continues to fall. How can one company be running that strongly and still can't manage to hold ground in value? Wall Street's tossing away the value of fundamentals is absolutely criminal. As was mentioned earlier, Wall Street seems to operate like some Las Vegas casino. What's also puzzling is when Steve Jobs was alive, there was his health and succession plans holding Apple shares down. Now that Steve Jobs is dead, the doubt of future innovation without Steve Jobs is holding Apple shares down. It appears to be an unsolvable no-win situation for Apple investors. As an Apple long shareholder, I've pretty much given up hope of Apple getting any respect from Wall Street no matter how much revenue Apple earns.

So....Apple is something Wall Street does not understand. They don't make widgets. Not in the traditional sense. By the time everybody figured out what kind of widget the iPod was, we had iPhone....before they figured out iPhone there was iPad, etc...Wall Street does not think with creativity, and can not understand the big picture with Apple and what they do for the lives of their customers, right?

Add to that the fact that Apple is notoriously close to the vest. Apple probably refuses to play Wall Street games, and I would not be surprised if Apple doesn't make time to hang in Wall Street nightclubs, bars and social circles, to be simplistic in my analogy. So Wall Street ignores Apple, because Apple won't come to their parties...?
post #52 of 214
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Originally Posted by TBell View Post

Moreover, this article nicely shows why the concept of investing is dead. If the markets were investment driven by any calculation Apple's stock price would be significantly higher.

So what are you going to do about it other than "piss and moan". Seriously, all you whining sycophants can protest all you want, but welcome to reality. Yes, AAPL is hugely undervalued from a fundamental perspective and yes, that hurts as I am Long but I am not a little baby crying "Wah, Wah !!". This is the stock market - we are playing with adults in a large group who do not care about each of us individually. If they don't want to buy AAPL and that causes us pain, then so be it ... none of us were forced to "invest" in the share market, and all this crying about how unfairly we are being treated by some anonymous, amorphous large group of other people is neither helpful nor mature. Stock market = risks. Perform Due Dilligence, BUT understand this may not be enough - even people who can card count must lose a hand or two in the casino.
post #53 of 214
Quote:
Originally Posted by djdj View Post

But if Apple doesn't pay dividends, what do sales and earnings have to do with stock price? Stockholders aren't getting a dime of that money.

They should be getting capital appreciation on the share price based upon increased sales and earnings etc. This was the whole point of the article - or do you just believe that every share which does not pay a dividend (there are more than a few) is worthless because of your erroneous belief that "stockholders aren't getting a dime of that money." ?
post #54 of 214
Quote:
Originally Posted by echosonic View Post

I was aware of much of this, but not all, and when stacked together this way, it is breathtaking. I don't like to engage in conspiracy theories, but I can't help but get the feeling that either somebody of institutional size wants into apple in a big way, or they are shorting and cheating. The phenomenon is undeniable.

The numbers do not lie. Parse away Zaky's glowing opinions all you want, his numbers don't lie. You can not argue the facts.

While I completely agree with Zaky's article (like you say, the numbers dont lie), there is no conspiracy. A conspiracy to keep the share price of a company of Apple's size down would have to be mind-blowingly widespread and huge, and would involve ridiculous sums of money.

I think it will be great if Andy goes into the Why's of Apple's low share price. My guesses are:

1) Apple's growth is greatly predicated on releasing one blockbuster product after another. Never before have we seen a company release as many blockbuster products as Apple has. The closest is probably Microsoft, with Windows and Office, but those 2 products have been around for decades. Apple has only in the last decade released OS X based macs, iPods, iPhones, iPads all of which are huge products monetarily. (Dont get me wrong. I am not saying other companies dont release new products. However, no one has been able to consistenly enter new market segments with products that are blockbusters financially. Even Google, which has released a ton of popular new products continues to rely on AdSense for nearly all its revenue). People just dont have a historical precedent to compare Apple to, which makes it harder for them to understand it.

2) No other company of Apple's size has grown as quickly as Apple has over the last couple of years. Again, lack of historical precedence means people find Apple hard to understand.

3) While their numbers tell one story, the numbers often seem fantastic. e.g., Despite the huge amounts of money the iPhone is making, and despite the fact that Apple takes in more than half the industry profits, the numbers clearly show there is still tons of room for Apple to grow. The smartphone market is stell far less than 50% of the entire cellphone market, and its reasonable to assume that in 5 years nearly every phone sold will be a smartphone. This means that even if Apple maintains its share, its iPhone numbers should nearly double. This almost sounds unbelievable.
post #55 of 214
Quote:
Originally Posted by DamenS View Post

So what are you going to do about it other than "piss and moan". Seriously, all you whining sycophants can protest all you want, but welcome to reality. Yes, AAPL is hugely undervalued from a fundamental perspective and yes, that hurts as I am Long but I am not a little baby crying "Wah, Wah !!". This is the stock market - we are playing with adults in a large group who do not care about each of us individually. If they don't want to buy AAPL and that causes us pain, then so be it ... none of us were forced to "invest" in the share market, and all this crying about how unfairly we are being treated by some anonymous, amorphous large group of other people is neither helpful nor mature. Stock market = risks. Perform Due Dilligence, BUT understand this may not be enough - even people who can card count must lose a hand or two in the casino.

Actually, no, this isnt the stock market. This is a forum that is discussing the stock market. I am not sure what you are whining about, because forums are designed for one thing, and one thing onlyexpressing your opinions.
post #56 of 214
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Originally Posted by addicted44 View Post

Actually, no, this isnt the stock market. This is a forum that is discussing the stock market. I am not sure what you are whining about, because forums are designed for one thing, and one thing only…expressing your opinions.

Yes - this is a forum discussing the stock market, which is exactly my point - this is the stock market we are talking about (how could you not even get this ?), yet people are postulating about widespread institutional conspiracies and vendettas against AAPL and how everything is essentially just not fair (as though "fairness" was somehow promised to them when they entered the share market - I must have missed that part of the brochure or skipped that part of the tour). I'm whining about the whining on this forum (you would think the stock market is an investment vehicle designed for 6 year old girls from all the irrational venting thus far) and about the lack of reasonable discussion. As this is a forum, other people have the right to do this, and as a forum I have the right to complain about, and disagree with what they are saying. Pretty simple really !
post #57 of 214
Quote:
Originally Posted by TBell View Post

Part of the problem is the Stock market has long since drifted from a place to invest money. Investing means contributing money to a company to help it grow and to benefit from that "investment" if the company does in fact grow. Now, however, with the concept of short selling (and all the off shoots of that) the stock market has become nothing more than legalized gambling. You short the stock if you are gambling the stock will go down. Those who short the stock have a build in incentive to drive the price of a stock down. That is not investing. Further, it directly hurts businesses to have forces purposely rooting for its stock to go down, in turn, hurting real investors. What really stinks is those who short stocks are allowed to borrow the stocks of those who are so called investing of the stocks to work against the investors to try and drive the price down.

Moreover, this article nicely shows why the concept of investing is dead. If the markets were investment driven by any calculation Apple's stock price would be significantly higher.

Frankly, your understanding of the stock market is wrong. The stock market is NOT a place to invest in companies to help them grow. Any investments you make in the secondary market (which is what nearly all transactions, excepting IPOs, which regular investors can nearly never get into) does NOT go to the company at all.

The secondary market exists to provide liquidity for investors. This helps a company grow indirectly by providing angle investors, venture capitalists, and entrpreneurs an exit strategy. A long time ago companies used to go public to raise funds for expansion, but this is rare now (and even rarer still in the Tech industry, where capital investments can easily be covered by a few VCs).

Once you recognize that the Secondary market (i.e. Stock exchanges) are not intended to grow a company, but rather to provide liquidity, you will recognize why short selling is essential.

(1) There is nothing wrong in selling short, because if someone sells a stock at a certain price because they think it will go down, that means there is someone on the other end who buys it at that price because they think it will go up. It is a fair exchange.

(2) Yes, there is a risk in people having an incentive in driving down the price of a stock. However, if there was no short selling, then there would ONLY be incentives for people to raise the price of a stock. No one would be talking about the negatives. People would ONLY be talking about the good stuff, making everything seem hunky dory, driving the stock price up, until reality was exposed and the bubble burst. Short sellers have an incentive to expose negative news too.

The real problem is that disclosure laws are too lax, easily circumvented, and hardly enforced. Which means people can get away with a whole lot of crap. In reality, it isnt too much negative news that is the problem in the stock exchange right now, but rather, the presence of too many cheerleaders that is a problem. The classic example is CNBC. They have a HUGE incentive to downplay negatives and only talk about how well the stock market is doing, hence blowing up bubbles even more (because stock markets going up means more people invest means more people watch CNBC). It has become less egregious since the downturn, because they were so awfully wrong, but the bias towards cheerleading and ignoring negatives still exist. (As an aside, Bloomberg is usually a better bet than CNBC, because their source of revenue is financial professionals themselves, and the news dept is not expected to make money. They focus a little more on reality than cheerleading because that is what their clients are paying them 2k a year for).
post #58 of 214
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Originally Posted by DamenS View Post

Yes - this is a forum discussing the stock market, which is exactly my point - this is the stock market we are talking about (how could you not even get this ?), yet people are postulating about widespread institutional conspiracies and vendettas against AAPL and how everything is essentially just not fair (as though "fairness" was somehow promised to them when they entered the share market - I must have missed that part of the brochure or skipped that part of the tour). I'm whining about the whining on this forum (you would think the stock market is an investment vehicle designed for 6 year old girls from all the irrational venting thus far) and about the lack of reasonable discussion. As this is a forum, other people have the right to do this, and as a forum I have the right to complain about, and disagree with what they are saying. Pretty simple really !

I misunderstood the spirit of your post. If you see my earlier/later posts, you will see we are largely in agreement on the conspiracy/fairness concepts.
post #59 of 214
Quote:
Originally Posted by addicted44 View Post

I misunderstood the spirit of your post. If you see my earlier/later posts, you will see we are largely in agreement on the conspiracy/fairness concepts.

Yes - I got that we basically agree from your posts, and thank-you for clearing up some of the misconceptions many people here are harbouring under (re: short selling, company fund raising, malevolent institutions with a grudge against apple etc.)

As regards the substance of the article, I agree entirely, but it has been obvious for quite some time now that AAPL is an undervalued stock (ANY time you hear Value investors in total accord with Growth investors about a company's merits, you know something is likely awry). However, I do not think this necessarily means Apple won't continue to be undervalued by the stock market and over what time-frame ... no-one does. Therefore, I guess what I'm saying is that whilst the fundamentals state AAPL is wildly undervalued, unless other people start to agree with us and start buying large amounts of AAPL, maybe it ISN'T entirely "undervalued" per se - "eye of the beholder" and all that ...
post #60 of 214
It is too easy to say Apple's P/E ratio is low because of uncertainties due to the loss of Steve Jobs.

As far as I can remember back, Apple always had an unusually low P/E. This is not a recent development. It's been like that before Jobs re-joined Apple.


Here are my 2 cents as to why:

P/Es are typically different for different industries. And average P/Es are best derived from comparing like companies.

Now with Apple, analysts always had a hard time comparing it to like companies.
What's a company like Apple?
Apple pretty much has been its own beast ever since its early days.


Apple has lots of intellectual property, but not a lot of real assets. A bit like Microsoft or Google one could argue.
Such companies can easily burst like a bubble, which is why they often have extreme (low or high) P/E ratios.
Yet with Microsoft and Google, both have dominant market positions guaranteeing them earnings for years to come.
Apple is perhaps more volatile. They depend on bringing out new hardware hits year after year. A bad streak of misfires could bring the bubble to burst.
With corporations slowly changing their ways, Microsoft is in a better position, they can have a bunch of misfires before it gets really bad for them.
Same for Google. They will be wealthy for as long as there is advertisement on the Internet.
Basically Apple cannot be compared to Microsoft nor Google as easily, so Apple's P/E won't correlate to theirs.


Yet Apple is not a typical hardware company either. Manufacturing changed, and nowadays Apple has no factories or other 'hard' assets. Inventory is low too.
So you cannot really compare it to let's say a car manufacturer (who would also typically create their own designs from A-Z).


Apple might also be compared to a luxury goods brand, something like an expensive designer clothes, spirits or watch manufacturer. Yet comparing those P/Es won't work either. People typically buy computers more often than really expensive watches, while much less often than clothes or spirits. How many designer clothes can you have in your wardrobe compared to mobile phones in your bag?
It's not comparable, which makes deriving of the correct P/E for Apple difficult.


And finally, Apple did almost go under in 1996/97 and I think this also still reflects on the current P/E. If luck changes and with no other Jobs around, the next time Apple could very well go under. That uncertainty is built into Apple ever since.


All these factors combined turn Apple into such a unique beast. So based on what should its average P/E be?
It's guesswork, really.

My best guess would be to weigh Apple, how much do you think it compares to a software company, a car manufacturer, a luxury good manufacturer (and maybe a few others) and then take those industries' average P/Es and weigh them accordingly to come up with what Apple's average P/E should be.
But that's still pretty rough...
post #61 of 214
Quote:
Originally Posted by echosonic View Post

So....Apple is something Wall Street does not understand.

I dont blame Wall Street for this. Lets face it. Who in the Tech world understands Apple? Nearly every rag you read pretty much derides Apple for making technically-inept products, and selling them to mindless followers, and teenage kids, whom they influence with their awesome marketing (ironically, the only part of their operations which is outsourced to a 3rd party).

The reality is (and I know it's not cool to commend Apple for anything) Apple is a very unique company. Until we have half a decade of MBA grads who entered the market after studying about Apple and its unique business models in their HBS Case Studies, Wall Street will not understand Apple.

And I have no hope of the Tech world ever understanding Apple (although Google's Larry Page seems the rare exception who is getting it).
post #62 of 214
Great Article, and I agree with it very much.

Here's the thing about AAPL Stock, ALL rationale, technical, and logical signs say that this Stock, even above $400, is the best and "safest" buy in the Market. At the current levels, it's kind of a dream come true, and I for one am buying up more Shares little by little, as it falls more,.

I feel that any naysayers toward the Company and/or Stock, are basing it on more fear-related, emotional, and imaginations - be them potentially true or not. These naysayers can also be those who act in action as well as sentiment, being those who Sell the Stock. Now, obviously, the situation in Europe, etc. dragging the Stock down is far more rational than AAPL on its own going lower, in a healthy Market. Even then, I see it as a buying opportunity, timing the "bottom" is naturally the difficult part.

All signs point to up, with AAPL. The valuation is already pricing in slow forward growth, and the Company shows no signs of slowing down. The great "What If" exists, with the unfortunate absence of Mr. Jobs, however, it seems as if many people perceive Mr. Cook to be some sort of newcomer. It is justifiably perceived that he has been practically running the company for the past couple of years or so, during their most profitable and growing periods. Also, many who follow Apple closely feel that he is far more responsible for their current success and wealth than what he gets credited for, but that's another story.

Assuming that AAPL's P/E doesn't increase, which is really a worst-case scenario, considering the Market at least can slightly live with and truck-on with the Political/Economical situation playing tug-of-war with it, 2012 seems to be a poised for strength. New iPhone, new iPad, possible iTV, and reports indicate that Apple is spending far more money now then they did before, on "something/s", so perhaps new stuff in the pipeline. Even for those who fear the future without Jobs, the next couple of years should be on their respective paths regardless of whether he's with us or not.

Apple products are stronger than ever, and those who feel like the company has "peaked" because of its enormous wealth and success, are very mistaken. The iPhone has a VERY small market-share in the overall Mobile Phone market, not to mention, they didn't ship the most phones of all vendors last Quarter, proving that even the iPhone has a lot of room to grow. As well, additional provider contracts, etc. will just further the potential for growth. As well.. they are just starting to gain traction in other Markets, such as China, where demand for Apple is outrageous, and where they are very "new". With China's growth at the moment, and growth potential, Apple is a top company to capitalize on this. Therefore, even as perhaps the worlds wealthiest company, Apple has tons and tons of room for growth potential.

Which leaves it up to the mortals at the helm. I feel that Apple has done everything right, considering what they're working with, with Steve's two blows to the Company (and world), resigning, then unfortunately passing. Tim Cook is the best man for the job, and they are clearly working on keeping the team tight, and happy, and striving. The addition of Bob Iger to the Board is a great sign and step, as he will bring many things to the table, and was someone who also knew, and worked with Steve Jobs. Again, they're keeping it "tight knit" which is what is paramount to keeping Apple as Apple.

Shareholders have all this to base their judgements/valuations on, however, yes, the fearful art of "what if" does exist, and yes, anything can happen, but I feel that Apple is spelled out for you ("UP"), and anything in the other direction (in the near-long term, at least) would be a major unforseen and unpredictable event.

Shareholders also I feel underestimate the large cash pile, as this can be seen as "insurance" in a sense. Not to mention, AAPL the Stock is seemingly rarely acknowledged by the company. Any mutters to Wall Street by Cook could send the Stock up ("he knows we exist!"). In the case that the worst possible scenario occurred, Apple has plenty of untapped areas they can use to support the Stock, i.e: Splits (PLEASE! We would all benefit), Buybacks, Dividends, etc.

Of course, Market manipulation, sleazy analysts riling up their fans with talking points and shifting positions, and jumping on the worlds most headline-grabbing company whenever a glimmer of bad news pops up (almost always baseless) as it's the hot-thing to do for them (cough, Cramer, lost all respect for him.... cough), and the worst "invention" ever, Short Puts against a Stock, all push the AAPL Stock around as if it's completely controlled by them. The fact that Apple doesn't acknowledge AAPL gives sleazy Analysts and Shorters almost uncontested control.

I feel that all the logistics say that Apple is the best bet, and best buy in the Market, absolutely at these levels, and even past $400. Let's hope I'm/we're right!
post #63 of 214
Quote:
Originally Posted by DamenS View Post

Yes - I got that we basically agree from your posts, and thank-you for clearing up some of the misconceptions many people here are harbouring under (re: short selling, company fund raising, malevolent institutions with a grudge against apple etc.)

I dont think Andy Zaky would believe those either (esp. since he clearly seems to think a correction is coming). Like others have suggested, I would be interested in what he thinks are the causes. I have laid out some of my opinions about that (I would not go as far as to say they are correctjust ideas at the moment).

Out of curiosity, do you have any ideas as to why the market isn't pricing Apple "correctly" yet (assuming you think this is the case, which it seems from your earlier posts you do).
post #64 of 214
Quote:
Originally Posted by Godzilla View Post

Shareholders also I feel underestimate the large cash pile, as this can be seen as "insurance" in a sense. Not to mention, AAPL the Stock is seemingly rarely acknowledged by the company. Any mutters to Wall Street by Cook could send the Stock up ("he knows we exist!"). In the case that the worst possible scenario occurred, Apple has plenty of untapped areas they can use to support the Stock, i.e: Splits (PLEASE! We would all benefit), Buybacks, Dividends, etc.

Honestly, I am not a huge fan of Splits/Buybacks etc. I think, in general, management has too many incentives to do them at the worst time possible, and only lead to double taxation.

That being said, it does seem to me that the lack of interest paid towards the stock by Apple is playing a role in dragging down the stock (not sure about the magnitude..it may only be having a few cents of effect, or maybe hurting the stock by double digit dollars). It might not hurt Apple to give it a try right now. OTOH, the ability to operate without considering the stock price has certainly played a large part in making Apple, Apple.
post #65 of 214
Quote:
Originally Posted by hobBIT View Post

<snip>

Farnkly that was one of the best attempts at explaining Apple's "low" P/E anywhere on the internets. Kudos.
post #66 of 214
The only thing in the way of rocketing the stock is no dividends! It would probably be 1000$ by now if they gave dividends. But don't get me wrong. If they where more popular it would start building a buble for shure. Now you know that it's a good buy any day of the year!
It would make the stock more unstable and the speculative day traders would have a field day making lots of hype on rumors that arent true (they would make their rumors in purpose to making a fast profit)

The only ones that would benefit are short sight investors.
post #67 of 214
Quote:
Originally Posted by addicted44 View Post

I dont think Andy Zaky would believe those either (esp. since he clearly seems to think a correction is coming). Like others have suggested, I would be interested in what he thinks are the causes. I have laid out some of my opinions about that (I would not go as far as to say they are correct…just ideas at the moment).

Out of curiosity, do you have any ideas as to why the market isn't pricing Apple "correctly" yet (assuming you think this is the case, which it seems from your earlier posts you do).

I was going to await that next article, because I don't have any answers or even rampant speculation, but it has been something I wondered after almost losing all of my stock in 2008 (I bought on Margin in 2007 - Eek !!).

The only things I think make any degree of sense are the loss of Steve Jobs - at least in 2008, but that's not as applicable now with the longish "handover" of duties and even greater solidity of earnings, cash reserves and product diversity (the P/E was low even when he was around and the pipeline for the next 5 years seems solid, so this can't really be it), the size of the company (this would be my best guess as to what OTHER people are worried about - though it seems clear there is still so much market share to take and enable strong growth prospects), the fact that there have ALWAYS been people willing to "short" AAPL (not sure why - but they have lost a LOT of money thus far - well apart from 2008).

Maybe a combination between the loss of Steve Jobs and the PERCEPTION of greater competition (Android and the new Amazon tablets), though these are different products, aimed at different markets really (especially the Amazon product), in conjunction with most pundits not understanding this ? The increased level of patent claims, litigation, potential injunctions ? As we all know Apple doesn't innovate, we just steal ideas from Samsung and HTC ...

In short (sorry to "short" something here), I have no idea why Apple is so undervalued, though I suspect all of the things above play some part in the equation, I don't believe any or all of them provide a satisfactory explanation.

PS - One other thing is that being a High Beta consumer stock, any HINT of a recession is going to affect the stock (2008 and now), however the stock was probably undervalued even when it was at $420, and when the whole Euro situation didn't seem quite as dire and immediate as it does today.
post #68 of 214
I know it will be shocking for many of you, but although they undoubtedly differ on many points (which I am sure readers will point out in reply to this post), the closest company of Apple I can think of is ... Samsung, in the sense that they both do not care about stock exchange & financial people judgment, whiich ( on the condition they wisely use this freedom, of course) give them a precious indemendence ...
post #69 of 214
Quote:
Originally Posted by umrk_lab View Post

I know it will be shocking for many of you, but although they undoubtedly differ on many points (which I am sure readers will point out in reply to this post), the closest company of Apple I can think of is ... Samsung, in the sense that they both do not care about stock exchange & financial people judgment, whiich ( on the condition they wisely use this freedom, of course) give them a precious indemendence ...

Actually I would think more of Berkshire Hathaway (not that Buffett is anti-sharemarket or shareholders by any stretch of the imagination). I know when discussing not doing share splits or paying a dividend, Steve Jobs used to bring up Buffett/Berkshire as an example he followed somewhat.
post #70 of 214
Quote:
Originally Posted by frugality View Post

Wow.....amazing what you get here on these interwebs....financial advice on a Apple fanboy site...

Someone should check how much Apple stock this Zaky guy owns, and what his vested interests are in this...

Really, you don't have to worry about us "fanboy", we know what to to with our money. You could get a life, if that is still not too late.
post #71 of 214
Quote:
Originally Posted by AppleInsider View Post

Andy Zaky is a graduate from the UCLA School of Law, an AppleInsider contributor and the founder and author of Bullish Cross -- an online publication that provides in-depth analysis of Apple's financial health.

Quote:
Originally Posted by frugality View Post

Someone should check how much Apple stock this Zaky guy owns, and what his vested interests are in this...

i'm with frugality on this one. what are the holdings of the author? and why does the original article mention that they're a holder, when the article as posted in the comments says just the above? edit?

and how about the timing? what would this article have read like just five weeks ago, when aapl was trading in the mid 420s?

i'd like to see an in-depth analysis by someone who doesn't have money at stake in the game. cuz i'll guarantee you, zaky is in it for the money.
post #72 of 214
Quote:
Originally Posted by addicted44 View Post

Honestly, I am not a huge fan of Splits/Buybacks etc. I think, in general, management has too many incentives to do them at the worst time possible, and only lead to double taxation.

That being said, it does seem to me that the lack of interest paid towards the stock by Apple is playing a role in dragging down the stock (not sure about the magnitude..it may only be having a few cents of effect, or maybe hurting the stock by double digit dollars). It might not hurt Apple to give it a try right now. OTOH, the ability to operate without considering the stock price has certainly played a large part in making Apple, Apple.

Very much agreed. It was part of how Steve Jobs made Apple, "Apple", kind of like the punk-rocker amongst a group of suit and tie adult-contemporary musicians, who makes more money than all of them whilst flipping them the bird.... And people question why Apple is so "cool" to people?

My theory is that if Tim Cook decides to play the Wall Street Game, and "hang out at the Clubs", per-se, then in the short term, this will be extremely beneficial to the Stock. I think that if he made a peep in a direction clearly aimed to drive the price up, the players will rally. However, in the long term, THAT is what could make Apple "Just another company". Wall Street will suck you dry if you let them. I like Apple's game-plan, BUT, I wouldn't mind a taste of acknowledgement by the new CEO and team at this time, enough to support the Stock, and enough to give an ominous voice against anyone who'd "dare" naysay against Apple. However, it's really a fine line.

I do feel that Apple has more tools to put to use were they under the impression that they needed to rally the Stock up, than about any company out there. Untapped areas, a company that doesn't acknowledge its own Stock or Wall Street, etc.

On another subject, Apple guided uncharacteristically high this Quarter. A good idea? Hopefully! I took their word for it, and decided not to listen to the "Analysts" this time, so if what they're saying is true, even under a VERY conservative P/E and Stock valuation, following the Companies own earnings should put nice profits into Investors who got sucked into buying at the Highs, just before earnings, expecting the usual giant jump in Share price.

If they miss their own estimates, the Stock will get punished once again, however, regardless, the Quarter will be a phenomenal blowout, and people will try and pin it on Cook's perceived "Newbie-ness", when in actuality, they guided shortly after Jobs' passing, and I believe that Cook probably had little to do (in terms of any uncharacteristic behavior) with the Guidance this quarter.

One thing that I haven't seen mentioned here, is how Apple's last quarter "miss" was a 110% proving point as to how much Analysts salivate at the Apple headline. Apple shattered their own expectations, which is ALL that matters. Also, they had the perfect and justifiable excuse: Widely known new iPhone on the way. And guess what? As AAPL's shares got punished for a falsified "miss", they were reporting record breaking numbers on the new iPhone. To me, this spells: Buying Opportunity for the Savvy (obvious, really) Investor. Again, hopefully I'm right.

Had AAPL not been mis-reported and mishandled after the previous Earnings Call, the Share would have hit over $450 (it was trading higher than $427 I believe) easily, and would have continued after, as the Market rallied. $500 would have been in sight by the end of the year, of course, Political situations would have perhaps had their way with that, however.

Again, I feel that all "obvious's" point toward AAPL being currently at a level where Investors will slap themselves for not taking advantage of it in the near future. What dragged the Stock down, before the Europe "World is ending" headlines resurfaced with a vengeance, was baseless and humoring iPad "Cuts" rumors, same thing that happens evveery Quarter, and is usually disproven, and those who bought on the dips, usually benefit.

Now, the day before those rumors, AAPL finally started gaining its traction back, and the falsified "miss" of earnings seemed to be getting shaken off, as the Stock rallied, and closed just below $410. Then, ironically, some "source-less", baseless rumors float around, and [Explicit] like Jim Cramer do 180's on words supportive words they stated just a couple weeks before (nothing changed!)?

As well, after "the fall", Apple has showed decent resistance to the Markets fall, however, inevitably got sucked in. It even rallied on one of the days where the Market tanked as a whole. I feel that the "perception" of AAPL tanking is overblown, as they went down for a couple of days on some (baseless/rumored/falsified) "bad news", which is par for the course for AAPL, but then the general Market hit the fan, plunging AAPL with it, making it "appear" as if the Stock is on a spiral, when it's just following the pack. I feel that when the Market rebounds, AAPL will do so at a much higher rate, as the value will become paramount. If not in the near term, then we have Q1 coming up, and a plethora of new products next year. In the near-long term, I think it's spelled out for us.
post #73 of 214
Quote:
Originally Posted by extremeskater View Post

The reason why is we have a global economy and the stock market these days have very little do to with a single companies earning. It seems everyday there is some bad news about he economy and the market drops like a rock taking Apple and many other companies along with it.

Very little connection with a companies' health. Only with how eager banks will be willing to lend you money. Problem is: Apple doesn't quite need the banks so much as the others.

The "markets" are basically computer programs that anticipate stuff on the basis of what other computer programs might do. Hence the knee-jerk reactions that aren't based on any well-thought-out reasoning (think: understanding of how Apple ticks). I remember well, when Apple was still using PPC processors, its stock tanked together with the others on the news that there was a bug in the Intel mathematical coprocessor. Based on a good understanding of the situation, its stock should have gone up accordingly, instead.
post #74 of 214
Quote:
Originally Posted by VanFruniken View Post

Very little connection with a companies' health. Only with how eager banks will be willing to lend you money. Problem is: Apple doesn't quite need the banks so much as the others.

The "markets" are basically computer programs that anticipate stuff on the basis of what other computer programs might do. Hence the knee-jerk reactions that aren't based on any well-thought-out reasoning (think: understanding of how Apple ticks). I remember well, when Apple was still using PPC processors, its stock tanked together with the others on the news that there was a bug in the Intel mathematical coprocessor. Based on a good understanding of the situation, its stock should have gone up accordingly, instead.

Well said. We have a fear based, scaredy-cat Market. This is a Stock manipulators dream (Search a Video of "Jim Cramer Stock Manipulation" to see just how easy it is), as they can direct the Market based on the same tired rumors we've been seeing for the past year it seems, "Europe this/that", etc. No facts, all "Fear/Hope", either of those words will Bear or Bull the Market.

Me personally, I told myself I'm not gonna live in the headlines. Naturally, any remotely decent Investor/Trader will account for them, understand what's going on, etc., however, recently more than ever, it has been proven that there's no rationale there. One month it rallies on the same subject that sends it tanking the next, then rally, etc. etc.

I don't understand what correlation AAPL has to Greece or any of that stuff, and it's looking like a "fixed Market" in how things go up and down together, as if individual Companies don't make a difference......... IN A MARKET THAT IN ITS PUREST ESSENCE AND NATURE REVOLVES ONLY AROUND COMPANIES! NOT POLITICS!.
post #75 of 214
Quote:
Originally Posted by Pooch View Post

i'm with frugality on this one. what are the holdings of the author? and why does the original article mention that they're a holder, when the article as posted in the comments says just the above? edit?

and how about the timing? what would this article have read like just five weeks ago, when aapl was trading in the mid 420s?

i'd like to see an in-depth analysis by someone who doesn't have money at stake in the game. cuz i'll guarantee you, zaky is in it for the money.

That's BS. Having AAPL Shares doesn't discredit ones opinion, namely when they're stating facts and logistics. In fact, it backs up their claims as they're putting their money where their mouths are.

There's a difference between corrupt hyperbole and logical arguments for something you believe in/are invested in.
post #76 of 214
Quote:
Originally Posted by NormM View Post

If the share price doesn't go up, in another few years AAPL will have accumulated more earnings per share than its stock price. That is, it will have accumulated $400 billion in cash and other assets. The stock price is obviously going to start going up before that happens, so it's just a question of when. It could be soon. So I wouldn't be so sure the stock will keep going down with the market.

Not so. I bought all my Apple shares in 1996 when Steve Jobs joined the board. At the time I am pretty sure they had more cash in the bank than their market capitalisation. I still have all those shares and hope to retire on them!
post #77 of 214
Quote:
Originally Posted by macinthe408 View Post

It's unfortunate that no one but the British will properly parse the sarcasm pasted all over this article. Without a doubt the best AI article I've read in a long time.

Complete agree. Greatest article I've seen as well.
post #78 of 214
Quote:
Originally Posted by addicted44 View Post

While I completely agree with Zaky's article (like you say, the numbers dont lie), there is no conspiracy. A conspiracy to keep the share price of a company of Apple's size down would have to be mind-blowingly widespread and huge, and would involve ridiculous sums of money.

I think it will be great if Andy goes into the Why's of Apple's low share price. My guesses are:

1) Apple's growth is greatly predicated on releasing one blockbuster product after another. Never before have we seen a company release as many blockbuster products as Apple has. The closest is probably Microsoft, with Windows and Office, but those 2 products have been around for decades. Apple has only in the last decade released OS X based macs, iPods, iPhones, iPads all of which are huge products monetarily. (Dont get me wrong. I am not saying other companies dont release new products. However, no one has been able to consistenly enter new market segments with products that are blockbusters financially. Even Google, which has released a ton of popular new products continues to rely on AdSense for nearly all its revenue). People just dont have a historical precedent to compare Apple to, which makes it harder for them to understand it.

It's only a matter of time before Apple releases a product and everyone goes - meh. It nearly happened with the iPad and I waited nearly a year to buy one. It's just the law of averages. Past performance is a good indicator but the future is unknown.
post #79 of 214
Quote:
Originally Posted by AppleStud View Post

I agree the stock is completely undervalued, as the article points out again, and again, and again. And as anyone who is so inclined can see for themselves if they analyzed Apple's 10q/k's (tip of the hat to Andy for doing the extensive amount of legwork, though).

I'd be much more interested in a discussion of just WHY apple is so undervalued and why the CNBC-types are so useless (the story that iPod sales are slowing is a tragic miscarriage of journalism and the reporters / producers of that segment should be fired). So, why are they so bad? Why is the stock so undervalued?

A few thoughts:

1. In terms of trailing p/e, it's actually not too terribly undervalued compared to other tech stocks -- everybody is being hit right now.

2. In terms of profit growth, they are very undervalued

3. Apple is in uncharted territory. No company this large has ever grown so fast. This means that every econometric prediction model out there is going to say that apple's profits simply cannot continue to grow this fast.

4. People who believe that apple's stock will continue to grow may be under-capitalized (I know I am!)

5. CNBC is totally irrelevant, except perhaps for short term (as in hours) stock manipulation. CNBC is just money-porn. Its a way for little people to feel big. Totally pathetic.
post #80 of 214
Quote:
Originally Posted by DamenS View Post

Actually I would think more of Berkshire Hathaway (not that Buffett is anti-sharemarket or shareholders by any stretch of the imagination). I know when discussing not doing share splits or paying a dividend, Steve Jobs used to bring up Buffett/Berkshire as an example he followed somewhat.

Interesting comment, thanks.

But for them (Apple and Samsung) , no matter how sales, profit, etc .. can be big, this is a secondary issue.

The only issue is worldwide domination.

This will be a facinating Kurosawa-type samourais fight to the death, where unprepared, untrained or weak players will be cut into tiny bits (as it is already the case).

There will be blood, for sure, a lot of blood (and Stock Exchange likes this). I do not think it will be Apple's one ...
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