Big-cap tech stocks like Apple have enjoyed a huge upwards rise during the COVID-19 pandemic, causing some investors to wonder if some Big Tech names are now in dreaded bubble territory.
Brian Sozzi for Yahoo Finance:
Just don’t lump Apple (AAPL) into the often heated tech bubble debate, argues Wall Street power player Rob Arnott — known for deeply analytical takes on markets and stocks — founded Research Affiliates in 2002 and it has about $145 billion in assets under management.
“You look at Apple. It’s expensive. But is it a bubble? No no. You can use aggressive [financial] assumptions. They don’t have to be implausible assumptions to justify today’s price, and there’s lots of buyers who buy it based on that kind of analysis,” Arnott said on Yahoo Finance Live…
Arnott may be dead right to say Apple’s stock is not detached from a realistic outlook on the future of the business (excluding an Apple Car). If anything, the stock may continue to be a bargain… At 32 times estimated earnings the stock trades well below comparable multiples for Amazon (58 times) and Netflix (57 times). And of course, Apple shares trade below the 204 times forward price-to-earnings multiple on electric vehicle favorite Tesla (TSLA).
MacDailyNews Take: Apple stock is not a bubble as the shares remain woefully undervalued.
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
What difference does it make if Apple stock is a bubble? Value is value. Lucky investors who own a bubble stock become wealthy just the same. Amazon and Netflix sure must have a very tough bubble because I don’t see anything causing them to burst. Meanwhile, those shareholders have made a fortune. I’m not taking anything away from Apple, but as a long-term shareholder I don’t see anything wonderful about Apple always being considered undervalued unless some day it suddenly does achieve it’s “true/higher” value. Being undervalued sounds like a tease to me. Yahoo finance always shows Apple as being overvalued, so go figure that. Apple’s value is what it is and I’m happy with it. I think Apple has a decent or fair value, especially now that the P/E is around 40 which is much higher than it has been for years.
Apple will never be valued as high as Tesla, although some people think Apple is the better company. Big investors seem to believe in Tesla in ways that Apple can’t possibly match. Elon Musk’s “reality distortion field” appears to be magnitudes larger than what Steve Jobs ever had. I honestly like EVs but their future value seems a lot higher than I think it should be. I just don’t see everyone going out and buying Teslas within the next five years or so but I certainly could be wrong about that. Maybe the tipping point has already passed and I’m just too blind or stupid to see it.
People seem to focus on only Tesla vehicles. Don’t forget there’s a solar energy company inside there, that if they can get the costs down, could be a smash hit.
Tesla fit and finish just isn’t there for the price, in fact it’s GM bad…..
Apple deserves to be worth considerably more than $2 trillion. The company remains significantly undervalued.
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The “no-bubble” talk is interesting if/when one compares share prices with history…current prices are at ATHs. This means higher than past times including, late 80’s, early 2000’s and ’08-ish…all bubble-times.
Combine this with ATH with record corporate debt, while dismissing “bubble-talk” takes courage, ignorance, or both. Embracing bubble-talk doesn’t mean a company is bad, soon to experience a crash, or insolvency. It does mean, at least, being overpriced…and there are historically relevant implications.
The four most dangerous word in the investment business are: “This time is different.” -Sir John Templeton.