Originally Posted by drblank
When they bought shares a couple of days ago, it wasn't at a low point, it was at a high point. The 52 week low was under $400 a share, so they bought at closer to a high point for the 52 week range. I think they did it to prevent a massive selloff right when they announced the Stock Split.
No, my goal is to not have people buy when the stock is overvalued. I think it's overvalued or at least very close to that. Look at the stock price last year. It dipped lower during the summer months, so if I want people to maximize their profits for people trying to get into the stock, I would advise them waiting until they see a much lower P/E ratio, because they have traded at a much lower P/E, I think they've gone as low as 11 or slightly lower within the last year. Now, for those expecting the stock to reach $700 like it was last year, I would advise it's not going to happen that soon and they'd be better off just hanging on to the stock, do some dividend reinvestments and wait a few more years and HOPEFULLY it will hit $700 (equivalent).
I'm all for buying low and selling high, which is about as fundamental as possible. I don't see this as a low point moving forward, my gut feeling is that it will move lower within the next 6 months.
Do you know that they haven't made a product announcement in about 7 months? That's a long time for Apple not to make a product announcement. Their last product announcement was in the beginning of Oct, so I could Oct, Nov, Dec, Jan, Feb, March and now April with no product announcements. That's a long time in the high tech industry with a product mix like them.
First off NO ONE should be basing their investing decisions on what the price of a stock was LAST year. You are saying people should not invest in Apple now because the price is higher than last year. Really? So are you telling me it was stupid to invest in Apple in 2005 when the price was $40 since the price was only $20 in 2004? Crazy talk. You don't base the buy/sell decision on price history.
You need to base it on forecasted earnings in the next year, 5 years, and 10 years down the line. What happened last year was last year and should have ZERO effect on your decision to buy Apple.
So why was Apple $385 last year and $571 now? Easy. Apple was reporting quarterly AND yearly profit decline. EPS was declining on an average of 10%. If that trend continued the stock would easily stay at $400 and eventually $300. So why is it $571? Because they just announced that EPS GREW 15% this quarter after EPS DECLINE of 10% the last fiscal year. Earnings grow leads to higher PE ratio's and higher stock prices. The buyback is also helping. Apple has already purchased about 7% of the total shares. All things equal that means the shares you hold are worth 7% more. Cook also increased the dividend and made it clear that yearly dividend increases are part of the long term plan. That is EXACTLY what value and income investors want to hear.
Once the $90,000,000,000 is done in 2015 then things will get very interesting. Apple should be generating $60,000,000,000 of free cash flows a year and could easily raise the dividend by 100%. By then the stock will probably be valued close to fair value and there would be no need to do additional buybacks.
So if you are going to say Apple is OVER-VALUED you need to bring facts to the table. You can't say its because the price is higher than last year. Are the circumstances the same as last year? No. We are at 15% earnings growth instead of 10% earnings decline. So what are your facts?
You think profits will fall?
You think iPhone will fail?
You think the new products will fail?
You think the buybacks/dividends/Split will hurt?
Give us your reasons or you look like a troll.
Here are my reasons why I think the stock is still UNDER-VALUED and why I bought another 50 shares at $570:
1. Wall street sentiment has changed. So obvious. Stocks are on a great rotation. Wall Street loves to rotate into one stock and then rotate out of it. In 2009-2012 they loved Apple and hated Google. Apple went up over 500% in that time period. Google only went up 50%. From 2012 till now it was Google that went up 100% and Apple decline. My guess is from 2014-2017 Apple will be favored and Google smashed. Wall Street makes their money by fooling Main Street. They made a killing fooling Main Street into selling their Apple shares at $380 last year. They will make a killing fooling people into buying Google at $1200 this year.
2. Profit growth is back. Profits and Margins are up. 15% growth is not a small matter. Google's profits grew a mere 1% last quarter and a pathetic 6% after taking out the loss from Motorola.
3. iPhone6 will destroy the competition. The only edge the Samsung line has over Apple is screen size. That advantage ends this year. The build out of the ChinaMobile network can potentially grow iPhone sales in China by 300% in the next 18 months. Don't forget that the high middle class in China is growing at a rapid pace. Very soon the amount of consumers that can afford to buy an iPhone in China will surpass America and all of Europe COMBINED.
4. New products. iWatch will revolutionize the industry.
5. New services. A digital wallet and payments is a given. Soon Apple will have over 1,000,000,000 credit card numbers on file. Do you realize how valuable that is? Apple is also increasing its footprint in search, advertising, maps, siri, and retail.
6. Style and Retail. Cook said they will TRIPLE the amount of Apple stores in the next 12 months. Lead by former Burburry CEO Angela Ahrendts. They also have hired Paul Deneve, former CEO and president of the iconic Yves Saint Laurent luxury brand. Big things are coming.
7. Buybacks and dividends. When all is said and done Apple will buy back 15-20% of the float. In other words you own 15-20% more of the company than when the buyback began. It means your claim for the $60,000,000,000 in free cash flows every year and the $150,000,000,000 in cash is greater. If you buy now you can easily be locking into a 5-6% dividend in the near future. Think about that.