Wednesday, February 8, 2012

Putting Apple in perspective

Apple stock hit a new high of $477 today: that's up 50% from its recent low last June, up 510% from its low in January 2009, and up 14,800% from its all-time low in July 1997. Apple is now the most expensive company in the world, having eclipsed Exxon by $40 billion, and it is worth $190 billion more than Microsoft, which was once valued at $586 billion in early 2000. Wow. People worry that Apple is really expensive, but Apple is still 25% short of where Microsoft was 12 years ago.

And to think that this company with its absolutely stellar, world-busting growth, has a trailing PE ex-cash of only 11.3, and a forward-looking PE ex-cash of only 9.4! It just boggles the mind. If anything demonstrates how cheap this market is, Apple does. Investors today are getting paid very handsomely to assume the risk of a calamity. Anything short of a calamity, and prices could continue to rise.

Full disclosure: at the time of this writing I am long AAPL.


Benjamin Cole said...

Congrats to Scott Grannis on this one. I liked Apple too, but I thought they were "too popular" a while back. I was also worried about the untimely departure of Steve Jobs.

I still worry that Apple will become stodgy, just like Microsoft or IBM, or any established successful company. They were "lucky" to nearly go bankrupt and start fresh, in a manner of speaking. They were lucky to get Jobs back.

The future is interesting. Ultimately, I expect all software to be online and perhaps free. The computers to go online will sell for hundreds of dollars at most.

Perhaps new apps will raise billions, or maybe people will just put them online for free, like poetry or blogs.

But Grannis called it this time.

William said...

Looking at the chart of Microsoft's capitalization reminded me that Microsoft and Intel were added to the Dow Jones Industrials on Oct 26, 1999 - a few months before the peak.

Try to remember that being added to the DOW 30 is the kiss of death!