“Apple Inc. has been flirting with the title of world’s most valuable company by market cap for months now, and I’d like to argue not only does it deserve such a distinction, it is also very likely the company is undervalued,” Chris Moore writes for The Motley Fool.
“Even though the company has lost its co-founder, the fiery Steve Jobs, the company appears to be staying its course and continuing to bring innovative and disruptive products to the market,” Moore writes. “Apple has been gaining traction in corporate computing, still leads the smart phone race (when judged based on profit earned), and is preparing for a new wave of devices, some upgrades, and some brand new entries. Apple is also the 3rd largest computer provider in the US, with 11% of the market.”
MacDailyNews Take: Apple is actually the clear #1 maker of personal computers in the world when you refuse to use outmoded definitions and actually count all of the personal computers that Apple sells. Even HP CEO Meg Whitman admits it.
Moore continues, “Apple only has 1% of the corporate market, with Dell, HP, and Lenovo controlling 75% of the market, with roughly 25% market share apiece. Forrester Research Group estimates Apple will sell $9 billion worth of Macs and $10 billion worth of iPads to businesses this year – which is up roughly 50% from last year. On the other hand, the research group expects corporate spending on PCs and non-Apple tablets to decline by 3% to $69 billion. Further expansion into the corporate market has the potential to be a significant source of revenue for Apple.”
MacDailyNews Take: Again, if the total corporate spending is $88 billion and Apple Macs and iPads are expected to account for $19 billion, isn’t that 21.6% of corporate spending on PCs and tablets?
Moore continues, “Another potential source of revenue is expected to be announced Thursday in New York, where Apple is expected to unveil plans to digitize and revolutionize the textbook industry. I view this as a wild card – historically Apple has had its biggest successes when they’ve sought to break the established order of things and insert itself directly in the middle, but it has had its misses. For example, Apple TV in its current state remains pretty much an afterthought.”
MacDailyNews Take: Apple’s “afterthoughts” are other companies’ dream businesses (just ask Logitech):
• Strategy Analytics: With 32% share, Apple leading ‘Connected TV’ market with ‘hobby’ Apple TV – December 12, 2011
• Logitech says Google TV a ‘gigantic mistake,’ pulls plug on set-top boxes – November 12, 2011
Moore continues, “At a PE of 15.45, a net profit margin of 23.43%, and a deep pile of cash on its balance sheet, I consider the stock very cheap, and a very strong buy. Apple has tremendous pricing power with its suppliers and should be able to maintain its margins as it expands sales.”
Read more in the full article here.