Followers | 91 |
Posts | 3296 |
Boards Moderated | 0 |
Alias Born | 10/18/2010 |
![](http://investorshub.advfn.com/images/default_ih_profile2_4848.jpg?cb=0)
Tuesday, January 19, 2021 3:51:02 PM
Just don’t lump Apple (AAPL) into the often heated tech bubble debate, argues Wall Street power player Rob Arnott — known for deeply analytical takes on markets and stocks — founded Research Affiliates in 2002 and it has about $145 billion in assets under management.
“You look at Apple. It’s expensive. But is it a bubble? No no. You can use aggressive [financial] assumptions. They don’t have to be implausible assumptions to justify today’s price, and there’s lots of buyers who buy it based on that kind of analysis,” Arnott said on Yahoo Finance Live.
At first blush, Arnott’s comments on Apple’s valuation are perhaps slightly off the mark.
The tech giant’s stock is up 60%, embarrassing the Dow Jones Industrial Average’s paltry 5% gain (of which Apple is a component). During that stretch, the Nasdaq Composite has tacked on 40%. Apple is the second best-performer from the FAANG [Facebook, Apple, Amazon, Netflix and Google] cohort over the last year, underperforming only Amazon’s 68% advance.
Apple is among the most owned stocks in the entire stock market.
Investors have been keen on Apple for a multitude of reasons, including enthusiasm around new 5G iPhones, strong demand for Macs for those working at home amidst the pandemic and attractive levels of cash on the balance sheet. More recently, the stock has been bid up on speculation of the introduction of an Apple electric car within five years.
But take a step back, and Arnott may be dead right to say Apple’s stock is not detached from a realistic outlook on the future of the business (excluding an Apple Car). If anything, the stock may continue to be a bargain.
While Apple’s stock trades at a premium relative to its five-year average price-to-earnings multiple, at 32 times estimated earnings the stock trades well below comparable multiples for Amazon (58 times) and Netflix (57 times). And of course, Apple shares trade below the 204 times forward price-to-earnings multiple on electric vehicle favorite Tesla (TSLA).
New York, Ny, United States - October 20, 2016: Apple store on the fifth avenue on New York City. The cube glass entrance was designed by the United States-based architectural practice Bohlin Cywinski Jackson
Apple store on the Fifth Avenue on New York City. Credit: Getty
An argument could be made that Apple’s exposure to 5G’s rollout, long-term work-from-home trends (and the need for more tech gear refresh cycles) and it’s enormous cash pile makes the stock silly cheap relative to some of the aforementioned names in tech.
Even on a stand-alone basis, Apple’s stock still looks like a bargain. Given the strong tailwinds driving Apple’s business, a case could be made that Apple’s current forward P/E multiple should be more around 35 times and that earnings estimates for the fiscal year ended September 2022 of $4.32 a share are too low. Apply that 35 times multiple to an estimate of $4.50 a share (Street high is $5.07 a share, per Bloomberg data), and it yields a fair value on Apple’s stock of about $158.
Apple’s stock currently trades at $127. Cheap, say the numbers.
Recent AAPL News
- Adobe Soars 15% Pre-Market; Visa and Mastercard Encounter Hurdles in $30 Billion Agreement, and More • IH Market News • 06/14/2024 11:21:47 AM
- Tesla Surges 5% in Pre-Market; Virgin Galactic Drops 9% Following Reverse Stock Split, and More News • IH Market News • 06/13/2024 11:24:25 AM
- Tamer Than Expected Inflation Data May Spark Early Rally On Wall Street • IH Market News • 06/12/2024 01:07:00 PM
- Paramount Ends Skydance Talks, Oracle Shares Surge 8.7% on New Partnerships, and More News • IH Market News • 06/12/2024 11:19:10 AM
- U.S. Futures Rise on Fed Decision; Oil Gains on Demand Forecasts • IH Market News • 06/12/2024 11:13:28 AM
- Nasdaq, S&P 500 Recover From Early Weakness To Reach Record Highs • IH Market News • 06/11/2024 08:49:55 PM
- FDA Panel Supports Eli Lilly’s Donanemab, Rio Tinto Expands Stake in Boyne Smelters, and More News • IH Market News • 06/11/2024 11:11:40 AM
- Apple extends its privacy leadership with new updates across its platforms • Business Wire • 06/10/2024 09:40:00 PM
- Apple empowers developers and fuels innovation with new tools and resources • Business Wire • 06/10/2024 09:00:00 PM
- macOS Sequoia takes productivity and intelligence on Mac to new heights • Business Wire • 06/10/2024 06:43:00 PM
- watchOS 11 brings powerful health and fitness insights, and even more personalization and connectivity • Business Wire • 06/10/2024 06:43:00 PM
- iPadOS 18 introduces powerful new intelligence features and apps designed for Apple Pencil • Business Wire • 06/10/2024 06:43:00 PM
- iOS 18 makes iPhone more personal, capable, and intelligent than ever • Business Wire • 06/10/2024 06:43:00 PM
- Introducing Apple Intelligence, the personal intelligence system that puts powerful generative models at the core of iPhone, iPad, and Mac • Business Wire • 06/10/2024 06:43:00 PM
- visionOS 2 brings new spatial computing experiences to Apple Vision Pro • Business Wire • 06/10/2024 06:43:00 PM
- Updates to the Home experience elevate entertainment and bring more convenience • Business Wire • 06/10/2024 05:37:00 PM
- Apple Vision Pro arrives in new countries and regions beginning June 28 • Business Wire • 06/10/2024 05:14:00 PM
- Apple Showcases AI at WWDC 2024, Nvidia Stock Split Starts Today, and More News • IH Market News • 06/10/2024 11:29:44 AM
- GME Volatile as Roaring Kitty Goes Live Today, Meta Unveils AI for WhatsApp Ads, and More • IH Market News • 06/07/2024 12:09:15 PM
- Nvidia Becomes 2nd Most Valuable Company in the USA, ASML Takes 2nd Spot in Europe, and More News • IH Market News • 06/06/2024 11:34:59 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/03/2024 10:31:26 PM
- DJT Stock Falls 6% Post-Trump Conviction; UBS Restructures Senior Management for CEO Succession and More News • IH Market News • 05/31/2024 11:54:10 AM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 05/30/2024 08:14:20 PM
- Robinhood Shares Surge 3.3% on Stock Buyback Announcement; Anglo Declines BHP Deadline Extension, and More News • IH Market News • 05/29/2024 11:34:18 AM
- iPhone Sales Skyrocket in China, Nvidia Surges in Pre-Market Following xAI Fundraising, and More News • IH Market News • 05/28/2024 11:37:48 AM
ECGI Holdings Announces LOI to Acquire Pacific Saddlery to Capitalize on $12.72 Billion Market Potential • ECGI • Jun 13, 2024 9:50 AM
Fifty 1 Labs, Inc. Announces Major Strategic Advancements and Shareholder Updates • CAFI • Jun 13, 2024 8:45 AM
Snakes & Lattes Opens Pop-Up Location at The Wellington Market in Toronto: A New Destination for Fun and Games - Thanks 'The Well', PepsiCo, Indie Pale House & All Sponsors & Partners for Their Commitment & Assistance Throughout The Process • FUNN • Jun 13, 2024 8:18 AM
HealthLynked Introduces Innovative Online Medical Record Request Form Using DocuSign • HLYK • Jun 12, 2024 8:00 AM
Ubiquitech Software Corp (OTC:UBQU) Posts $624,585 Quarterly Revenue - Largest Quarter Since 2018 • UBQU • Jun 11, 2024 10:13 AM
Element79 Gold Corp Files for OTCQB Uplisting, Provides Financial Update • ELEM • Jun 11, 2024 9:25 AM