“With stocks at or near alltime highs, financial publications and market pundits are providing plenty of hot air as they inflate a bubble by talking about a stock market bubble,” John Buckingham writes for Forbes.
“Even at current prices, I’m still finding attractive stocks. There are certainly many growth stocks trading for rich valuations, but the beauty of active portfolio management is that you don’t need to own them. For instance, if you look at the S&P 500 you see that one of its most popular components is Netflix, the video subscription service, which trades for more than 300 times earnings,” Buckingham writes. “Sometimes stocks do grow into their multiples, but I find Netflix hard to justify at these levels. Something much easier to digest is the modest valuation of a world-class franchise like Apple, which trades for 14 times earnings and also rewards shareholders with a healthy 2.1% dividend yield.”
Buckingham writes, “Believe it or not, if Apple were awarded the same earnings multiple as Netflix, the consumer electronics superstar would change hands at nearly $12,000 per share.”
Read more in the full article here.
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12000000000000 ?
I’m a Netflix user, and, no way it’s worth 300 times earnings. There just aren’t enough good / new movies being added to justify any price increase in it’s service, let alone add compelling enough to add 10’s of millions of new users. With the demise of Blockbuster, video rental users have already mostly moved over.
Times earnings of other selected stocks:
GOOG: 32
AMZN: 1,409
PCLN: 33
FB: 121
LNKD: 697
One can only dream.
I”d be thrilled just to be back up at $700+ again
So what he’s saying is Apple is way under valued as a stock like all of us normal people already know. And Google is way OVER valued.
And if my aunt had a penis she’d be my uncle.
But if your uncle had a vagina, would he be your aunt?
As long as there are no follow up questions: yes, it is.
Click bait at its finest!
I cancelled my Netflix account. Stupid changes in policies. First, they changed from 6 devices down to 2 where you can view Netflix. Then, programming choices were reduced drastically so that the only choice you have is to upgrade to the “DVD Rental”. Stupid idiots at their management team. They could have had a life long member. I cut bait at three years.
That is incorrect. Netflix has a 6 device policy with 2 concurrent streams. I haven’t come across an issue but when errors occur it may be due to exceeding the # of streams.
They are trialing offerings with 2 and 4 devices with no restriction on streams. I do see an issue with this in that I have more than 2 devices in a household (2 Apple TVs, several Macs and also iPads and iPhones).
Netflix are obviously looking at ways to increase their revenue and prevent people sharing accounts. I agree that the later is unfair but they will need to be careful not to alienate their customer base.
Obviously not, even with massive financial engineering.
Their main breadwinner is mobile devices, and it’s a fickle market rife with competition.
Netflix will never get to 300x earnings and may have a tough time holding its present share price this year. Amazon Prime Video is very good and you get all those other extras like free two-day shipping and Kindle owners’ lending library. The combination of all three beats Netflix cold as far as I’m concerned.
Apple’s share price is dead in the water. Tim Cook can’t do a damn thing for shareholders. The company is constantly being downgraded and the share price continues to fall. Investors either hate Tim Cook or have absolutely no confidence in the man. I can only hope Apple is actively buying back shares at this point and possibly considering increasing dividends.
Stated as if you have special insight or it’s a fait accompli. I beg to differ based on speculation of new product lines and larger devices. I do believe 2014 will see Apple get more stock respect though certainly it hasn’t started off well.
I have been on Netflix for 6 months. The bardes thing is finding movies or TV shows. All they real have is word search and half the time all I get for the movies I am looking for is a listing under “Movies related to”. I would hope they rack the searches so they know what movies ect to go after. Also the content providers are pulling back from Netflix as their previous contracts expire.
They can have mine in a 2 for 1 deal at that price.
If AAPL trade at same PE as AMZN then it is worth well in excess of $50,000 per share.
A logical, well-reasoned piece from John Buckingham.
That said, and the truth remains, dead money walking here. Stay away, far away from AAPL until something (read that “anything”) happens to dislodge analyst/hedge fund managers’ opinions about iPhone margin declines, competitor market share gains, China Mobile weakness, Tim Cook ineptitude, etc., etc., etc.
There’s just no sense at play here, none whatsoever. Something much more unsavory is.
Wall-Nut Street:
if Apple were awarded the same earnings multiple as Netflix, the consumer electronics superstar would change hands at nearly $12,000 per share.
So let’s manipulate Apple some more. Right?
… Or AAPL at least!
Nowhere does this article talk about the circumstances that would have to exist for Apple to show an earnings multiple of another completely unrelated company, or what can be done to make that happen. This is just wishful thinking. Having such an earnings multiple may sound great, but is not necessarily the best thing for Apple in the long term.
what is so SAD:
Us Americans are so democratically/capitalistically challenged: why in the world do we have so much Schadenfreude: Apple is probably the only firm we export we can be proud of on the Made in USA stickers! Apple is the most ingenious & superlative & profitable firm we ever had, with the least fraud/corruption/abuse as well. Why do our best, waste so much energy in breaking Apple’s balls, thus making it so hard for Apple to keep succeeding, hence the real reason for iSteve’s cancer (from stress from small-minded people who fear success & change), if Apple is the sole co. in the Black that the entire worlds loves, whereas all other MAde in USA stickers are mocked/derided as typical, tasteless, diluted American junk?!
if only USA’s Economy, infrastructure, educational system, medical care etc. was as efficient as Apple. Beats me why the gov. consults Microsoft, Dell, Google. Sense & Sensibility + Think Different Brainpower is required in our USA. Inventiveness & Excellence is never reached by mediocrity but through Think Different, open-mindedness, fearlessness, vision – not dogma, patriotism, arrogance, soar losing, police-statehood, childishness, laziness etc.