“Just last week, I was explaining to one individual that she should be adding Apple (AAPL) to her portfolio. She asked, ‘What is the price at currently?’ When I stated that it was around $300, her reaction was ‘Wow, that is expensive.’ The thing is, she has never done any research in regards to AAPL and just because the price of the stock is high, it does not indicate that the stock is overvalued,” Anderson writes. “Just taking the price of a stock has no relevancy to the actual value, I explained. Now, she is a very intelligent individual, with a PhD, but I believe that many investors have this misconception of a ‘high priced’ stock. Depending on the company, market, and situation, a stock split can be very beneficial to shareholders and thus the company.”
Anderson writes, “The fact that Apple has a forward P/E of less than 20 based on 2011 full year earnings is astonishing. For Microsoft (MSFT), it may make sense, but Apple consistently outperforms and as large as the company is, it continues growing significantly as well… What is amazing is that Apple has beaten estimates for 31 straight quarters and in most cases of those quarters, it has done so easily. The last 31 quarters takes us all the way back to April 16, 2003. Do you really think anything is going to change all of sudden? While it may be possible, it is extremely doubtful.”
Read more in the full article here.
MacDailyNews Take: How does making the price more comfortable for less-savvy (and therefore much more fickle) investors help Apple Inc. in the long run? After all, it’s not like they’re under-financed and in need of operating cash.
For those who see the share price as daunting, but still want to get in on Apple: Establish a brokerage account that allows you to buy partial shares and have at it.
[Thanks to MacDailyNews Reader “GetMeOnTop” for the heads up.]