The Motley Fool: Apple Computer shares are cheap right now

“How do you value a company that just seems to ‘get it’? That’s my dilemma with Apple. On Tuesday, the Mac maker teamed up with Nike to introduce the Nike+iPod Sport Kit. It’s got a tiny electronic sensor, designed to slip into a Nike running shoe, that wirelessly transmits fitness information to a receiver plugged into an iPod nano,” Tim Beyers writes for The Motley Fool. “Nike has four million iPod-ready shoes available now, and according to BusinessWeek, that total could soon grow to 10 million. That’s an immediately addressable market of up to $290 million on kits alone for Apple.”

“But of course, that’s not where the real opportunity lies. Jobs & Co. need to give consumers excuses to buy more and different versions of the iPod, especially now that there are roughly 50 million of the devices already in consumers’ hands. Creating specialized uses for the iconic music player is one way to do so. In that sense, I believe the “Nike+” program will likely be the first of many similar partnerships,” Beyers writes. “That has me wondering: Is Apple’s stock really expensive? The company excels at marketing. It earns the highest customer-service marks in the computer industry. Its products are almost always technically astute. And its business model is so good that competitors are copying it. Just how successful does Apple have to be before we agree that it’s cheap?”

Full article here.

[Thanks to MacDailyNews Reader “vitaboy” for the heads up.]

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  1. It is the weirdest Damn thing. No good news seems to be enough to lift the stock. New laptops-down. Maybe the Nike deal, small as it is in real market potential will do the trick. I doubt it.

    I am starting to think it will take mutual fund managers starting to use Apples to make a difference.

    It is just very strange.

  2. I’ve read a lot of articles that suggest Apple’s run is over. I don’t believe it is, but it’s going to take some really good numbers to convince major investors otherwise, I think.

  3. Not Bill –

    If you want to understand AAPL, you need to understand the _market_ it is in. Tka e alook at historical AAPL prices relative to other tech companies and the tech indexes on a given day. You will see that AAPL swings with the over all market.

    In addition, there is something called the Beta (B) for a stock. it is a ratio of how much the stock swings realtive to the over all market. A Beta of 1 means it moves with the market. AAPL has a Beta closer to 2 which means that when the market is up, AAPL is up even more…when the market is down, AAPL is down even more.

    Of course, the Beta is not the only thing that influences the stock – so yeah when earnings are announced, new products, or competitors make announcements, all this has an effect on AAPL for the day.

  4. While it remains to be seen, my guess is that the new Nike+iPod kit will be a huge hit. As the article noted, if Apple sells out the first 4 million kits, that’s $290 in new revenue to the bottom line. That’s gotta give the stock some upside.

    I can only imagine that Reebok, Adidas, and Puma are now beating on Steve Jobs door to produce something similar. Remember what happened after Apple launched videos on iTMS with ABC/Disney?

    Suddenly, instead of $290 in new revenue, you might be looking at $1 billion in new revenue.

    So, exactly how much more successful does Apple has to get before people get its not just another boring Dell?

  5. Thanks “me.” That is an interesting perspective. Apple is “caught in the tides of a larger investment sea.” And, Apple tends towards greater extremes that the overall tech market.

    I keep hoping Apple stock will move counter the overall market because such great things are happening there product wise. I am perhaps too much of a fan of all things Apple.

  6. Investors will believe that Apple WAS cheap in the low-60’s, once they realize two things:

    (1) MacBook sales are above estimates. The Intel transition is going much better and faster than expected. This will help in the near term.

    (2) The iPod run is just beginning. With this Nike product, Apple is starting to turn iPod into a “wearable computer” platform. In ten years, iPod will not be about music, or even videos. It will be the heart of a computer system that a user wears. Separate wireless devices provide the specific functions the user needs, but the iPod provides a centralized and consolidated location for CPU power, color LCD display, data storage, user input (the click wheel), audio feedback, and method of data transfer to PC/Mac. Why make separate stand-alone devices, when the iPod can handle those common functions? Music was just a way to get millions of people to wear the device, like a piece of clothing or jewelry. Once the “platform” is in place (as it is right now), Apple can partner with other companies to create new capabilities where iPod is central component (as it has with Nike).

    By the time mainstream investors see this potential, the stock will have split two or three times and still be trading in the 60’s.

  7. Buy your stock now and don’t worry if it goes up or down 5-10 bucks in the near term.. In two years time, AAPL will be at least double the price it is now… We know it better than anyone.

  8. I would have to agree, that fundamentally speaking, Apple is cheap at current prices (mid-60 range.) And they have made all the right moves lately, yet the market is made up of a bunch of folks trading on rumor, emotion and fear. Since the beginning of the year APPL is down somewhere around 15%, and from later January nearly 30% on the year so far. I would take that as a great opportunity for some serious investing if someone wants to look closely at the fundamentals of a companies health, strategies and prospects for continuing success. Hang on when all the screaming fearmongers and sheep run, and buy. Do opposite of what the the crowd’s doing, invest for the long run, and you can’t lose. Don’t stare at, be obsessed with the hourly ticker, unless you’re a day-trader. The value will show itself, and then if you’ve invested wisely, when the bandwagon gets rolling and everyone wants to jump on, you get a free ride to wealth… Now, that’s not pundidtry, that’s just common sense, at least in my book.

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