Apple shares hit new all-time intraday and closing highs

8 Comments

1. Reminder that Apple’s P/E ratio is still low…

   Apple 32
   Microsoft 37
   Netflix 54
   Amazon 66
   Tesla 392!
   (¡¡Tesla’s valuación es muy cray cray!!)

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   1. Apple is fairly priced when it’s PE is at about 35. It’s fine if it gets as high as 37 or 38, after that froth. Microsoft is near froth but not poorly priced.

      Oddly, Amazon’s PE is actually near historic LOWS, as it has long been in the hundreds.

      Tesla, it’s interesting. They are building so much so fast, that they may actually grow into their PE, much like Amazon has over time. So it’s not as cray cray as it appears at first blush.

      Somethings in the market have high PEs and ad are frothy, but many, are hitting their revenue numbers well so, it’s actually not a bad market at the moment.

      As long as the fed doesnt put rates over 3%, the market should continue to do great and ‘float’ over the rest of the economy, because returns everywhere else, are relatively crap.

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   2. well done DisposableIdentity, you beat me to the punch. Reading this article my first thought was to comment on PE.
      To try and help readers who may not know PE, here’s an explanation.

      PE = (stock)Price to Earnings(profit). It’s a basic cost of a stock ‘rule of thumb’ using current stock price divided by (total net profit divided by number of shares – this is known as EPS or earnings per share). This EPS is calculated by adding up the EPS of each individual previous 4 quarters (the term used is TTM or trailing twelve months).
      Apple’s current TTM EPS is 5.60. With current stock price 182, divide that 182 by 5.60 = 32.5 (PE 32 rounded off). Obviously PE changes each quarter as a company grows its profit (or loses profit). On/about January 28 Apple will report EPS for the Oct-Dec holiday quarter. The previous holiday quarter EPS was about 1.65. I believe this holiday quarter’s EPS will be about 1.90 (my 1.90 assumption is based on 12 billion added revenue, increased overall profit margin, about 3.7% less shares on the market from buybacks). So take that 1.90, subtract the last holiday quarter’s EPS of 1.65 —- this equals .25. Add that .25 to the existing 5.60 for the new TTM EPS and new PE 31.5. Hopefully not too confusing.

      Important to know about PE. It is generally derived and effected by industry type, industry peer comparisons as well as a company’s expected revenue growth (though companies not making money but have huge expected revenue growth can see their EPS be absolutely astronomically high). Tesla, as a profitable example, has a massive PE but the EV industry is seen as huge potential and Tesla has expected growth to be very high. Ultimately, to some, higher PE means a stock is overpriced, I more often than not don’t agree with that. I see PE as a gauge of how robustly Wall Street/investors favor a stock. The favoring/sentiment on a stock is, unfortunately, often more important than fundamentals (see Gamestop for example).
      Ultimately I see Apple undervalued because Wall Street is often stuck using this extremely shallow(borderline thoughtless) peer comparisons, industry type and expected growth. Apple is sometimes put in the Computer Technology, Storage and Peripherals industry. it is sometimes bizarrely peered against HP and IBM. Apple expectations for growth are single digit and unimpressive (that is single digit growth based on almost 100 billion in profit is “only” 5 to 10 billion dollars). Wall Street oddly doesn’t see Apple as the clearly peerless company it is. They don’t see that Apple also sells an ecosystem that has customer retention numbers that are gaudy. They don’t see the brandname gold standard that can even expand markets(even for competitors) it enters (Apple is expected to expand the AR/VR market once they enter it). They don’t see that Apple, through its semiconductor business, has uniquely positioned itself to control its ecosystem and offerings from chip to final product to software to app/value adds. I could go on (this post is long enough 🙂 ) but the point being is that Wall Street puts far too little value on what clearly makes Apple on a higher plane than almost all other players.

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      1. Totally agree with everything you’ve said.

         The only thing I’d add is that with Tesla, by the numbers, it’s hard to see $1.2 trillion as a good buy. The current valuation assumes Tesla will capture the entire automotive market and double the average selling price and margins across the board. (Or capture half the market, and quadruple.)

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2. What happened to that Saudi oil company ARAMCO? It immediately surpassed AAPL (and everyone else) when it became “publicly traded” a few years ago. But it was fake, because only about 1.5% of its shares are available for trading by (public) investors. But it’s market cap is calculated on total shares, mostly held privately (not traded in open market). Even so, APPL left ARAMCO in the dust a while back, at around $2T.

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3. Aramco seems to have a market cap of over $7 trillion and not just $2 trillion. Is there something I don’t understand or do we not count Aramco as a company?

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   1. I believe that “7 trillion” is not in dollars. It’s in the currency of market where it trades. In dollars, it’s still in the top 5 for market cap. However, only 1.5% of its total shares are publicly traded, so I don’t think it should count.

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      1. You are right, I meant $7 billion. Being in Europe my site showed it in the European system. But it’s still more than $3 billion

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