“As the leaves turned this fall… Apple investors went from mania to panic. The stock plunged from its all-time high north of $230 per share to under $150,” Logan Kane writes for Seeking Alpha. “Meanwhile, the company booked billions of dollars in profit and record EPS.”
“Now, the stock has recovered off its lows and is headed up again, with optimism around the trade war and an earnings report that honestly wasn’t negative. Apple investors have been there before,” Kane writes. “For multiple times in the past 10-15 years, the stock has plunged to 10-11 times earnings amid rampant sell-side analyst and mainstream media negativity. I think that Apple investors should keep calm and hold onto the stock.”
“Apple is a highly cyclical stock, and there is endless money to be made trading cyclical stocks with good fundamentals. There is also the potential to get scared and sell your shares in Apple every time the media thinks it can’t delive,” Kane writes. “Apple is cheap. The company has levers it can pull to boost demand for the phones and maximize revenue. Wall Street isn’t giving credit for it yet, but it will. Apple’s low valuation is a reflection of volatility in the stock and not entirely of the risk of permanently losing one’s investment. Apple shareholders should take a page out of Journey’s playbook and ‘don’t stop believin.'”
Read more in the full article here.
MacDailyNews Take:
To all those who bought at peak mania…
LOL
The BIG difference in AAPL in 2019: APPLE NO LONGER HAS GOOD FUNDAMENTALS.
Cook can no longer blindly rely on Apple sheep to bail him out, as everyone can clearly see Apple prices are ridiculous.
Everyone knows Apple doesn’t innovate only iterate but raises prices sky high for the privilege.
We all realize Cook is just out to make a short term buck and he has done nothing but gouge Apple consumers at every turn for the last 8-years.
This stock is going nowhere because Apple is a company on an unknown chartered course with no vision at the helm.
Get off this aimless vessel while you still can.
😟
It is amazing that there are so many iHaters out there. They didn’t follow what’s going on with Apple, but not afraid to give quick and lacked of knowledge about Apple. Apple never stop innovate!, it never take its feet off the gas ⛽️. The streaming service is coming, Oprah Winfrey overlooks the whole project and hiring people to do it. The healthcare is another big wave coming. Just to name a few. If you want to know more, you have to follow Apple closely.
Indeed, we’ve seen just how well Apple keeps that gas pedal of innovation floored with all of the Mac Pro updates they’ve pumped out over the last five years…. /S
In the meantime, the Market’s valuation of AAPL depends on several key factors, not the least of which is their belief on future revenue & growth prospects. For example, what happened in December was a lot of fear that the China tariffs were going to kick in….
…and the underlying message now being telegraphed is to “have faith” because it is likely that the market is going to get scary once again as the revised March tariff deadline approaches.
Anyone who says that Apple doesn’t have good fundamentals fundamentally misunderstands the term good fundamentals.
Over a ten year period I have heard this dribble and have over a 18% compounded rate of return over the same period. I am always amazed at how there are so many doubters who probably don’t have a penny to their name. Then again I am also amazed how many doubters have an IQ less than 10.
Good luck Zerorandy, if that is your real name. It probably should be “Zero” period.
I believe in AAPL for my dividend needs, but I think either Apple’s business model doesn’t fit Wall Street’s ideal business model or the market is rigged in favor of certain types of companies. I’m still rather puzzled why Microsoft is worth more than Apple because on paper, Apple’s fundamentals seem much better. Maybe I’m just stupid. Apparently, Microsoft’s growth potential is seen to be much higher than Apple’s potential based on its cloud business.
They keep saying AAPL stock is cheap but it’s only cheap if it goes up much higher after being bought. Or if it does go up, it doesn’t stay up. I’m sorry to say, but when a company loses a third of its value in a couple of months, there must be something wrong. It sure wasn’t cheap for those who bought AAPL at around $200, because they got totally shafted by heavily overpaying for a crappy P/E.
I’m not whining or moaning over the recent share price drop. I simply don’t understand why AAPL trades the way it does. It’s quite volatile despite making plenty of revenue and profits, and then there’s that mountain of cash being available for use. I think it’s strange how Apple’s retail stores don’t seem to have any premium considering how much money they generate and how unique they are in the consumer tech world. It will be interesting to see if Apple trades the same when it moves from unit sales to Services, if that’s even possible.
Here’s why AAPL often trades at lower price-earnings ratio than Apple lovers think it deserves. These maxims take hold:
1. “Trees don’t keep growing to the sky”
2. Everybody who can afford an iPhone already owns an iPhone and without new records in iPhone sales Apple won’t grow because nothing can replace the iPhone, the most profitable hit product in business history.
3. Apple’s services sales growth, though impressive, is mostly dependent on record iPhone sales so not really an independent leg of the business.
4. Apple is a hardware company and hardware companies always lose pricing power over time as innovation slows. And there will be no “next big thing” to replace iPhone because Jobs is gone and Apple can’t innovate without him.
Here are the correct answers to these concerns.
Apple is far below the sky when one considers how much of people’s money goes to healthcare, entertainment, and telecommunications.
iPhones eventually need to be replaced. And Apple’s user base — now about 900 million people — is growing at a faster rate than the iPhone replacement time is increasing.
Service growth depends on user base expansion. Not next quarter’s iPhone sales. User both expansion has been steadily and predictably for years, including in the last quarter.
Next big thing is probably wearables + related health services. Apple is miles ahead of next closest competitor and keeps massive comparative advantages in winning the future. These include: (1) customer satisfaction rates through the roof, (2) Privacy orientation, (3) integration of software + software + unparalleled design + reputation for high quality. Most of the worlds best customers will only trust their most sensitive health info, including fertility info, orgasm time place and frequency, sleep schedule while on that “business trip” to the beach, etc., to Apple. And when the Watch + AirPods can measure blood pressure accurately in real-time (100 million Americans suffer from hypertension “the silent killer”), health insurers will subsidize its purchase price, which will increase overtime as it slowly becomes the tiny “medical tricorfer” used by Dr. McCoy years ago. As that transition continues, instead of a “hardware” multiple, AAPL will command a medical device maker multiple and I expect to be very rich. YMMV.
Nicely analyzed. Too bad the “professional analysts” keep looking at Apple like its General Electric. There is so much that they do in plain sight that the analysts miss. Apple is an energy company, registered with FEC. They focus on renewables and advanced battery technology. Think about the future. It will be about batteries running cities (already happening in Australia), electric cars, electric jets, electric spacecraft and all with renewables, because if any industry is headed down a dead end it is fossil fuels. Wall Street needs to pay attention to Apple, the company and not Apple the iPhone maker. They are so far beyond looking for the next big hit, and they’re will be plenty of those. Apple will continue to expand into industries that underpin the quality of our lives and if they keep focused on innovation, design and ways to make things easier for people we investors will continue to do well. No need to worry about buying AAPL at $200. 5 years from now it won’t even be a smudge in your rear view mirror.
Oh come on people! If you were as busy as I am On my Apple devices Plus one android, You wouldn’t have time To post Such psychobabble About Apple’s Past, present, and future demise! It will never change that content creators designers prefer Mac. That’s just the Way it is, And always will Be.
Dear MDN,
I think you might prefer this as more appropriate. Belief is so pedestrian.
I believe when Apple replaces Tim Cook, the stock will grow at a faster pace. TC has a pattern of being unfocused on what Apple NEEDS to be focused on and what loyal users WANT. Just think of the revenue missed due to the neglect for hardware that people have been waiting to BUY. (Mac Pro, Display, 4″ iPhone, etc..) It really is amazing no one on the board of directors is busting balls. It’s really more amazing to know Apple has enough revenue to accomplish these tasks/goals faster than any other company; yet, TC allows this to happen on his watch. TC will go down as the CEO that HURT Apple, more than HELPED it; based on his terrible track record/batting average.