“The current street consensus earnings estimates for Apple (AAPL) do not appear to reflect the potential upside from iPhone sales through 2008,” Portfolio Unlimited reports via SeekingAlpha.
“Assuming 20.0% operating margin on iPhone, 35% tax rate, and 900 million shares outstanding, Apple could earn about $1.82 in incremental EPS from iPhone sales and about $5.87 in total EPS in the fiscal 2008. Applying a 35x P/E multiple to the fiscal 2008 EPS gives a potential AAPL share price of $205.6 or about 65% upside from the current AAPL price of $124.5, in the next 12 to 18 months,” Portfolio Unlimited writes. “Although these assumptions may seem too optimistic to some, AAPL shares offer an attractive risk/reward profile to those who believe in the success of Apple’s latest gadget.”
Full article here.
That’s to say nothing of spiralling Mac sales.
And other new device releases. Steve mentioned deviceS that were coming and that iPhone was the first of those. By 2008, we can expect other cool things, almost certainly.
How many other companies could execute on so many fronts: iPhone with new cross-platform web standard; world’s premier operating system, consumer and pro apps with best-designed hardware; world’s premier music player and online music store; media center extender; and untold killer devices to come …
I agree with all of you. Take out the Iphone and this company is still way undervalued, considering everything they have going for them. I just keep thinking back to that Citigroup analyst who downgraded Apple not too long ago before this latest pop. That guy has probably cost some of his clients hundreds of thousands or even millions of dollars. What a moron!!
The quoted 35x Trailing P/E Multiple may well be a recent “standard” for Apple shares, but it is three or four times what was considered “reasonable” perhaps a decade ago. While it may well be true that the Leading P/E is more accurate than the Trailing P/E, even that is beyond what most would have considered “reasonable” … well into the “exuberant” range.
Stocks that trade mainly on emotions, rather than on reasonable expectations, are bad buys. A stock that trades on exuberance today (35X) could trade on anger tomorrow (3X) and bankrupt several thousands. Remember when Apple stock was in the low teens? A couple of dollars above their cash holdings? Sad!
DLMeyer – the Voice of G.L.Horton’s Stage Page Pod Cast
Yup, people need to be sure not to put all their eggs in one basket. Emotion is hard to separate when such an interesting company is involved. It is potentially very volatile, but Apple is fundamentally strong. It’s not only trading on emotion– the business is there to back it up now.
Connor MacBook and Apple Trader, I invite you to look at the history of DEC – Digital Equipment Corporation. They helped create the mini-computer way back when. They helped create the Internet, the machines used by BB&N being System 10s and much of the software of their design. Their VMS operating system was the basis for the original NT – totally re-engineered for the different platform and the different -end required, and to be compatible with other Windows products.
Bad management decisions – nothing to do with the products – caused the company to “suicide”. The skeleton bought by Compaq, which became infected and was bought by H-P – which was sick for a year or two after.
R,
I am one guy who took your advice to diversify many years ago. It was a bad decision. All I got were a bunch of sucky investments that went nowhere.
Then I wised up and invested in what I knew, computers and piled on the AAPL stock. That was before the big move up earlier in this decade. Now I am transferring all of my 401k and IRA money, which has been tied up in previous employers’ rotten and limited choice “diversified” plans and am rolling them over into a self managed roll over IRA with full access to the Nasdaq and AAPL. It is all going into AAPL. I’m betting the farm.
oh man i would love to see it over $200. i could afford a new Mac if it does that.
….glad i bought a few back at $15 and change.
Apple is systematically taking apart the MS monopoly and gaining marketshare every month in computers, OS and now browser share.
The iPod/iTunes/iTMS juggernaut has nowhere to go but up. Competitors are clueless and wait till the next-gen iPod comes out with the same touchscreen as the iPhone.
iPhone is still somewhat of a question but if can do half of what it looks like it will do, it will become a whole new type of must-have device and create a huge revenue stream for Apple.
The touch-screen interface has the potential to revolutionize a whole range of products we haven’t even dreamed of. Even if the iPhone is only moderately sucessful, Apple has technology here to bring many consumer electronic devices to a whole new level.
That said, I still wouldn’t put more than 10 to 20% of my portfolio into Apple stock.
I am a real small fish, I bought my 1st Mac last July, and 2 weeks later purchased 5,000usd of AAPL, (my 1st stock purchase)
Really pissed at my self for not buying 5,000usd last Feb at 80 per share like I ws planning. I used this weeks down turn and just purchased 5000usd at 118.75, and the wife (I am the head of the family, she is the neck) agreed that we will start buying 2000usd per month, for the long term.
make me proud Steve!
Disclosue: this writer owns Apple stock
Synthmeister, IMHO I don’t think Steve Jobs will ALLOW the iPhone to be only “moderately successful.” Sure, it might have problems here and there in the early days of its release, but SJ’s ego will simply not permit it to fail (ala the Zune) in the long run. It just ain’t gonna’ happen!
DLMeyer: Good point, and Apple nearly self-destructed itself due to bad management in the ’90s. But under the stewardship of Chairman Jobs it isn’t putting a foot wrong.
Don’t take others’ advice so easily– there are many factors involved in investing. For me, I have quite a bit to lose. Risking so much on one stock makes no sense. If you’re young, you can get more risky. In hindsight, everything is a sure bet. You take chances and they either pay off or not. If you look at most peoples’ stocks after personally managing them, they tend to lose quite a bit because they’re looking for a get-rich-quick scheme. That’s a recipe for trouble for most, but it sometimes pays off.
Forrest Gump put everything in Apple once and he never had to work for the rest of his. Except, the movie was made before the stock crashed and he lost everything…
My diversification has paid off pretty well. I am heavy on Apple, but I also have a few others outside of tech, and bonds. When one goes down, the others tend to stagnate. Then, it reverses.
Invest as you deem effective.
@LinuxGuy and Mac Prodigal Son:
I like your aggressive investing style. The only thing I want to point out is that you need to make sure that you are comfortable with this decision should the inevitable outcome occur.
Diversification is the best solution–unless you are a big time institutional investor that can recoup your money somewhere else. For me, I have approx 10 different stocks. The majority of which belongs in the high-tec sector. The others are in beverages: Coke and another company that I can’t recall at the moment.
Crocs(CROX) is doing really great and they will split their shares soon. Google it up for more info.
I thought Apple was booking iPhone revenue over 24 months? So high sales will have a great psychological effect, but it won’t hit the bottom line directly. It might be a while before the stock reaches $200.
@ LinuxGuy and Mac Prodigal Son
I did the exact same thing, and I’ve been well rewarded for it. “Invest in what you know” is the single best piece of advice I ever got.
dl meyer is the most boring person on the net
i checked
No one is more boring than Paul Thurrott.
All this hype as we watch Apple stock tumble following the dismal keynote. I suppose stock prices will continue to rise despite nothing concrete on the horizon for Macs and Mac software. I’m not impressed with Leopard whatsoever. Nothing but bells and whistles added, and the desktop is ugly. This is Apple’s response to Vista? I expected more. Regardless, I’ll remain loyal throughout, but I’m not jumping on any bandwagons just yet with all the disappointments mounting in 2007.
Not a good idea to bet the farm on AAPL stock. It is FAR FROM CERTAIN that the iPhone is going to be a hit. I know NOBODY who wants to buy one, outside of the most diehard Apple fans who must own everything that Apple produces.You guys should take a step back and take an UNBIASED look at the iPhone… this product has a very limited appeal (especially at its high price point) with no tactile keyboard, no 3rd-party apps, no videocamera, no iChat ability. In essence, it has nothing that all the phones on the market don’t already have. My Treo already does sooo much more than the iPhone does… for example, it even has a SlingBox client so I can watch my TiVo on my Treo! Not to mention Pocket Quicken, FileMaker, MP3 audio player, instant directory assistance lookup with DirAsst, movie showtimes with Vindigo, remote control capability with Salling Clicker, and lots lots more. Meanwhile, the iPhone has a Google Maps widget? Big frickin’ deal. Seriously, folks, the iPhone has a limited appeal. It certainly can’t hold a candle to the Treo.
Nov. 2001: bought AAPL @ $10/share (split adjusted price)
June 2007: total gain 00
MDN magic word: “strong”
Nov. 2001: bought AAPL @ $10/share (split adjusted price)
June 2007: total gain 1000 per cent
MDN magic word: “strong”
Not as long as you are on-line.
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MW=try – I do.