Why Apple stock is still undervalued

The newest reason that even at a nearly $2 trillion market cap, the tech giant’s stock may still be undervalued? Apple is working on unveiling a ‘bundle’ of Apple services for one low price this fall.

Apple Central World is nestled in the heart of Ratchaprasong, Bangkok’s iconic intersection.
Apple Central World is nestled in the heart of Ratchaprasong, Bangkok’s iconic intersection.

Brian Sozzi for Yahoo Finance:

“I think traditionally, Apple’s stock has always been undervalued,” veteran tech analyst Rene Richie told Yahoo Finance’s The First Trade. “We saw them reach their goal of doubling revenue from services early. And it seems that still has running room for them. And as we approach things like augmented reality glasses, all of these services, that’s a greater service for all the value they can tap into.”

If the latest speculation on Apple holds true, it could be well down the path of doubling its revenue from services again in the not too distant future.

Any service bundle would inject a fresh, recurring revenue stream into Apple. And it would come at the time of potentially the introduction of Apple’s first suite of 5G iPhones. Couple these two growth drivers together, and Wall Street may soon be tripping over themselves to mark up their earnings estimates on Apple for the next several years.

MacDailyNews Take: Yup.

Apple deserves to be worth considerably more than $2 trillion. The company remains significantly undervalued. — MacDailyNews, August 10, 2020

Trillion, schmillion. Over time, Apple will go much higher than that. The company is currently horribly undervalued.MacDailyNews, March 1, 2018

3 Comments

  1. Apple may have been undervalued, but it certainly is at fair value by now with a P/E of nearly 35. Apple has a higher P/E than Facebook and Google. It’s still short of Microsoft’s P/E of 36 or so. For a company that is still considered a hardware company, Apple should be of somewhat fair value. I’m not going to dispute MDN’s claim of Apple being undervalued. I hope it is greatly undervalued and will eventually reach the supposed true value. As a shareholder, of course I want Apple to be worth more but I’m still a conservative-thinking investor.

    I was looking at Tesla ($1626) with a P/E of 840 or so and they’re saying Tesla is “undervalued.” I don’t know if the market was always like this, but something seems completely out of whack in terms of stock valuations. Tesla is now being compared with Apple despite the huge differences of revenue and earnings between the two companies. In fact, Tesla is said to be worth trillions already. Whatever… With the current market trend, all that’s needed is a tiny seed and suddenly you’ve got a giant sequoia growing in your back yard.

  2. If Apple came out with necklaces sporting vintage iPods, like a lanyard with the iPod hanging in the middle like a pendant, and the iPods had little lights on them and could be used as flashlights in the dark, they’d sell like hotcakes and Apple’s value would go through the roof.

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