“After Apple reported first-quarter results in late January, the stock fell to a 52-week low of $92,” Daniel Sparks writes for The Motley Fool. “Shares were looking particularly attractive after the sell-off. But the stock has since rebounded to above $100, trading at about $102 at the time of this writing. Is the stock still a buy at these levels?”
“Apple’s P/E ratio of 11 is notably low. A P/E ratio this small essentially assumes Apple’s EPS over the long haul may barely outpace inflation. For reference, the market has awarded the average stock in the S&P 500 with a much higher P/E ratio of 23 — more than double Apple’s,” Sparks writes. “Apple’s free cash flow yield is nearly 11%, near the highest levels it has been in the last five years — and well above other tech giants such as Microsoft and Alphabet, which have free cash flow yields of about 6% and 3%, respectively.”
Sparks writes, “There are two key reasons Apple’s EPS should be able to continue to grow at rates beyond inflation over the long haul.”
Read more in the full article here.
MacDailyNews Take: Seems like, after some water treading, the second half of the year will be better than the start of the year. (It couldn’t get much worse, could it?) Of course, when it comes to stocks and Wall Street, who knows?
Sure are, it’s like a fire sale out there. Of course there is no money coming in from one court case, a huge $450 million dollar fine in another, and a government just a few steps away from forcing Apple to service them but that won’t stop them.
This stock is going nowhere. There have been calls to short sell this stock at this price because it went up a few dollars over the past month. This is hardly the type of stock the big investors want to own. Apple’s climbing EPS means nothing if the company as a whole is unattractive. Tesla with a negative EPS will continue to leave Apple in the dust in terms of share price gains. Wall Street has already said why the Apple isn’t worth buying.
Instead of using that cash pile to get into new businesses, all Apple is doing is buying back shares supposedly because they don’t know how to spend the money any other way. It appears the Apple haters are right. All shareholders are going to see is some new variation of an iPhone or an iPad and not much more. Most of the top tech companies are always making moves like buying up companies or offering some totally new products or services. What is Apple doing? Relaunching old products that investors consider stale already. No one ever has any good words for Apple’s product launches. They’re always greeted by disinterested yawns.
Apple clearly doesn’t seem to generate any excitement for new investors to want to buy into the company. Now that Apple is being stepped on by the feds, no one wants to own part of a company embroiled in some case they can’t possibly win. Tim Cook will only piss off the feds every time he opens his mouth. Apple’s share price is almost certain to stagnate for another year so what’s the point of owning it. Any crappy tech stock can perform better than Apple and will definitely have a higher P/E ratio from the get go and not suffer from all the negative vibes Apple is giving off.
Apple may be a buy only if you’re interested in dividends but I wouldn’t expect any share price gains from the company this entire year. When a company can’t gain more than a few dollars in share price for a couple of years, you know that stock is not worth owning.
It’s a cat-and-mouse game between Apple shareholders and when new products are going to be released. Since tax season is just around the corner, Apple will most likely release new hardware just after people get their tax returns. Stocks may go up… slightly.
Unless Apple has something that will truly woo us, don’t expect too much.