Can Apple get back to $700?

“Over the past year, Apple (AAPL) has made a complete transformation in the way it is perceived by investors. Specifically, the stock has gone from a growth play to a value play, and has taken investors on quite a roller coaster ride as the transition has unfolded,” Matthew Frankel writes for Seeking Alpha. “Still, a lurking question on the minds of a lot of investors is whether or not Apple will reach the $700+ level that it saw so briefly last September, and if so, when could this happen?”

“For the sake of this discussion, I’m going to assume that Apple is no longer a growth company and will most likely never see the extreme growth rates of the last decade again,” Frankel writes. “What does this mean for valuation of the stock? It means that the current valuation level is here to stay, give or take a little, and that a TTM P/E of 12.5 is probably close to what we can expect. If Apple releases a truly game-changing product, it could increase significantly, but I feel confident in saying that P/E multiples of 25 (like last September) are a thing of the past, regardless of how good Apple’s future products are.”

Frankel writes, “But wait, isn’t 12.5 a little low, even for a value play? Yes, but I also believe that Apple warrants a considerable discount simply due to its size.”

Much more in the full article here.

25 Comments

      1. There wasn’t really a reason (beyond investor speculative greed and hysteria) for the super-quick increase to $700 either. As it rises, we’ll see more and more positive articles and opinion editorials on the ceiling for AAPL.

        The ceiling will go up and up, sucking in more and more investors until there the last minute when your average Joe buys in, then there is a huge sell-off. Once everyone’s saying buy… you should sell.

    1. … actually mid-teens … is badly drawn and overly rough. If you add in the value of the pile of cash, you get a more realistic valuation. So … 12+6(?) and you are right back in the high teens. It’s a question of knowing what the numbers really mean.
      MOST companies carry significant debt. Last year, AAPL did not.

  1. Seriously! This ass clown can’t even accurately “predct” the past why should anybody believe he has a clue about the future. I guess the “standard” for financial analysis is about the same as it is for journalism.

  2. What would cause Apple to run up that high again? All the hedge fund managers say that the iPhone is no longer the top smartphone in terms of hardware and that cheaper Android smartphones are just as good. Apple’s profit margins are said to be lagging rather badly and the iPhone’s market share is dropping rapidly. Even the iPad no longer holds top spot in global market share. Now that Steve Jobs has been dead all this time, they have nothing positive to say about Apple. They all hate Tim Cook and Apple in general for not giving up that reserve cash.

    Everything I’ve heard the hedge fund managers say practically screams they’re not going to be running up Apple’s share price to $700. It appears to me that Apple will run into a wall of $600 unless they can manage to sell around 55 million iPhones in a quarter which doesn’t even seem possible. I don’t think there will be enough hedge funds behind Apple to push the share price up high again.

    Besides, I can’t take another run to $700 only to see it collapse again. What a fiasco. Apple really needs to figure out how to not be doomed. They need to acquire some business that will remove that stigma from the company. There has to be some business that would do that for them. With their money, it shouldn’t be that hard to do. Apple has been carrying that unlucky albatross for too long a time.

    1. Amazon … PE off the charts, because no P … Forward PE = 102
      CRM … PE off the charts, because no P.. Forward PE = 81

      Meanwhile, back at the ranch, Apple PE = 12.7, Forward PE 12

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.