Is it too late to buy into Apple?

“Besides a reflected glow as part-owner of today’s most glamorous gadgeteer, what does 77 a share get an Apple buyer? Let’s go first to the balance sheet. Impressively, 28 years since incorporating, Apple has no debt, long- or short-term. At last report, it had just $8.52 a share in total liabilities, mostly accounts payable. Those liabilities are easily covered by $22.34 in assets, including no less than $15.39 a share in cash and short-term investments. All in all, Apple’s stated net worth is $13.82 a share. That probably undervalues Apple’s real estate, which includes its Cupertino (Calif.) headquarters, plus plants in Sacramento and Ireland. Adjusting generously, we can guesstimate that one share contains $20 in net assets.” Robert Barker writes for BusinessWeek.

“For a buyer of Apple at 77, that leaves $57 to wonder about. Business could hardly be better: In the past four quarters, sales grew 45%, to $9.8 billion, as net more than tripled, to $508 million, or $1.28 a share, according to the Capital IQ, a division of Standard & Poor’s (MHP). With new products such as the $99 iPod shuffle and the $499 Mac mini winning rave reviews, bulls see Apple blowing away Wall Street’s consensus estimate of $2.05 a share in the next four quarters. Suppose it does, earning $2.45, the mean estimate not for calendar 2005, but for 2006. That still leaves Apple trading at 31 times earnings, vs. 26 for Dell Computer (DELL),” Barker writes.

Full article here.


  1. so is this guy saying that it would have been best if you had bought in last year when it was around $20-25 bucks a share?

    Hell, I could have told you that, and I let my Series 6, 63 and 7 licenses expire YEARS ago… It doesn’t take a financial advisor to impart the financial wisdom of ‘buy low, sell high’…

  2. “That still leaves Apple trading at 31 times earnings, vs. 26 for Dell Computer (DELL),”

    Well, seems reasonable, given the fact that Apple stands to potentially double its market share over the next year or two, and is already growing its user base at a ate TWICE that of Dell’s.

    Investors love growth. Apple is a growth stock. It will command a premium and a higher P/E until its not a growth stock any more. End of story. So-called indusrty journalists really should give a more balanced outlook when reporting on phenomenons such as APPL. To only paint half the picture is worse than saying nothing at all.

  3. good article to put things in perspective. People tend to get really caught up in the hype of the stock market. This is important to understand and keep you grounded. If Apple doesn’t meet expectations everyone will go to these numbers and the stock will plummet. This is a crazy time to be invested in Apple for sure. Everyone is betting on the Mac mini’s success. Will it work???

  4. it will work and I suspect, if they have a really calendar year 05 (which I strongly anticipate), the board will strongly consider dilluting the share price by offering a split in early 06.

  5. yes, my best expectation have been once again belittled by reality.

    I had sold again all my lot at $72 and seen it climbing to almost $80.
    Am not complaining – made a lot – but now I hesitate to do it again (buy low and sell again on a spike). Worked so far but I do hesitate this time.

    Magic word “every” as in “I can’t be right every time, right?”

  6. If you have owned Stock for many years Like I have
    the last time Apple stock was above $50 a share Apple, Split the stock.

    I would say that if APPLE wants to keep its Stock selling in large volumes, that they again, might do a stock split, to keep it affordable.

    Just a thought

  7. If you subtract out the cash and short-term investments from the balance sheet, then you also need to subtract out the interest from the earnings when computing net-cash P/E.

    But it’s still not really overvalued, if you believe that Apple’s incredibly well positioned to begin to leverage its virtual digital-music monopoly, its operating-system technical prowess, its nimble engineering team, its unequalled management, and its healthy relationships with the owners of record labels (which presumably could be morphed into a new relationship with film archive owners).

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