Apple Computer (NASDAQ: AAPL): Is This Stock Still Cheap?
Aug. 31, 2012
Am I the only one, who thinks that shares of Apple (NASDAQ: AAPL) are still so cheap?
The Apple shares are trading 15.6x earnings, a few points above when the company reported its historical record-high earnings in the 1st quarter of this year.
Google (NASDAQ: GOOG) is trading slightly above 20x earnings or about 4 multiple points higher than Apple. That said, Google is more expensive than Apple; however, Google's extra 4 multiple points could be due to an anticipation of its own smart phone product, which would probably show up in the market this winter shoppin season. It's earnings probably fully reflect the stock price at this moment.
Then, back to Apple, the comapny is going to deliver its new iPhone to the market and that's what most consumers around the world are waiting for. The 3rd quarter earnings could be in line with consensus estimates but the 1st quarter would probably show the another new record of earnings. Plus, there would be more new products coming into the market, such as new iPad or iPad mini, iTV, and 13" retina display MacBook Pro. All those new products from Apple are huge catalyst for the stock appreciation in coming quarters.
If its multiple trade at around 15x and earnings to grow to above $50 next year, the shares of Apple should trade around $750 within next 12 months. I believe this is conservative number but my long term argent is well-above $1,000 and it may not take that long to reach there.
Akira Kondo is long AAPL.