Apple shocked the Street after hours last night with a quarterly release that bested analyst forecasts by 20%, and recorded a 118% increase in profits. On top of that, the company is now sitting on an unimaginable $100 BILLION in cash. With $13.87 a share in profit for the quarter, and the company projecting $8.50 a share next quarter, the stock is now trading at a sub-10 P:E ratio, (probably 7 or 8, realistically).
This is just a monster company. While I have philosophical differences with the way they distribute much of their content, there is just no arguing against owning this company's stock. At eight times earnings, the stock is a steal at $420. It'll probably open a lot higher today (based on after hours trading), but it's a bargain at even $500 a share based on these numbers.
And with $100 billion in cash, the company can do anything it wants. Stock buyback? Done. Acquisitions? Done. Move the entire Internet into the iCloud? Probably done. I haven't owned the stock in a while, but I think it's probably time to change that.
In the matchup between Apple and Google, I think you'd probably do well to own both. But Apple seems to have a much firmer grasp on consumers. Google is a great company, but they've struggled to get people to adopt their technology offerings in a way that Apple never has.
Apple sold 37 million iPhones last quarter. That's a staggering number. With the iPhone 5 rumored to be released this year, it's safe to say that they'll sell the same number all over again. For the time being anyway, the company looks unstoppable.
If you already own AAPL, congratulations. If you don't, you probably want to think about it. Like, now.
Up 7% on the open. What's really impressive is that its P/E is only 13.
Personally I hate Apple products and have always thought the stock was over-hyped but investors are getting paid.
Some say AAPL is it's own asset class. Can't say I disagree with those numbers.
I posted a week or so ago that I don't usually buy anything like AAPL. I avoid the over-hyped stocks, most tech stocks or realistically most "growth" stocks because I don't like to invest my money on something that needs to grow 20% in order for me not to lose money.
That being said, I bought AAPL on Monday because at these prices it's more like the value stocks that I like. While I consider AAPL to be at value stock levels, it's growth is astounding. I was looking at the last quarter's information and I think the only product line not growing double digits was ipods (because they're intentionally cannibalized by iphones), but I think ipods even grew double digits in the most recent quarter.
You mention that the iPhone 5 will likely sell 37 million units again. I actually disagree. Other than launching to new countries, the iPhone 4S wasn't really revolutionary. If the iPhone 5 has the same functionality as the 4S with a slight redesign and is 4G it will be a blockbuster in the US. I personally would buy that phone and I'm still hanging onto the 3GS because the 4S wasn't even to convince me to upgrade.
With an iPhone 5, iPad 3 and possibly Apple TV this could be an amazing year for Apple products.
Then, the cash...... it is seriously absurd. There's a part of me that hopes they take a small chunk and do something ridiculous. It would be awesome if they use ~1% of their cash and bought the dodgers or built something crazy. Realistically, I think they have to pay a dividend at some point in the next year or so. It would be pretty nice to $50/share back in my pocket on AAPL. If not, it is serious buyback time.
I think long term they will need another revolutionary product because android, kindle, asus tablets, etc... will eventually erode their current products, but for the next few years AAPL is looking pretty great.
My personal hope is that they develop Apple TV to take on the cable companies. I know its mostly because of ESPN (which I can't live without), but my cable bill is $180/month for HD Cable (no movie channels) and internet. It seems like Apple is big enough and innovative enough to do better than the current offerings.
I could've worded that better. What I mean is that each of those 37 million units that were purchased in the 4th quarter will be re-purchased when the iPhone 5 is released. On top of the tens of millions of other iPhone 5 units they'll undoubtedly sell.
The 37 million 4Ss sold will NOT be re-purchased as iPhone 5 models. Only a small percentage will be. Apple gives a discount on upgrades at one year and two years of ownership. The 4S came out late Sept and the 5 will undoubtedly come out BEFORE then. This is NOT to say that they will sell less. I will anticipate that the 5 model will draw in Android and Blackberry users who have never owned an iPhone.
Your general sentiment is correct, but I don't believe apple gives the discount. I'm pretty sure the carriers give the discount in order to lock you into a 2 year contract. I'm pretty sure Apple's price to the carrier is not discounted.
That's always the challenge with releasing a new phone annually. People are forced to sign 2 year contracts or pay out the ass for the phone. People are incented to buy a new phone every other year.
To think Jobs took the stock from sub-$20 in 1997 to $450 in 2012 in unimaginable. Clearly they have a strong 3-5 year pipeline that Jobs laid out. After that, you strongly have to consider the imaginations of the lead dogs and if they have the same innovation principles that Jobs did. I would imagine Jonny Ive is the central role here. If there is ANY sign this chap may scram this stock is a sell, a short and start investing in it's headstone.
My cost basis is $67 and I have a limit order to sell at $500. I think the best thing to do would be for them to buy Twitter. I've always been a fan of facebook (I think the product is fun and cool, but more importantly the value of the company lies in the data it collects), but I believe in Twitter more and more every day. Apple is not going to have the innovation sans-Jobs so it will have to buy it - and this is the first step in the downfall.
All in all, Jobs is smiling down (or up) at the company and he deserves the credit. Biz schools should have full courses dedicated to him. He truly is the Edison and Einstein of our generation. Everyone should read Isaacson's book as I found it fascinating.
I agree with Eddie, this is a buy, but you need an exit strategy more than anything else with this beast. Everyone has their own opinions and is very emotional about this company. What other CEO death prompted worldwide attention, flowers at their stores, etc??
Ciao.
I agree with tyrets. This company/Jobs should have its own business strategy/creativity class for business schools
AAPL was a good buy at $80, $180, $300, and $600.
$97 billion in cash!! Thats more than all but 52 companies in he S&P. It's getting ridiculous.
As far as Apple goes, they will need to bring a new product very soon. I go by what I see, not with fancy financial numbers.
When the Ipod Touch and the Iphone came out, I bought AAPL, because these items were revolutionary and would eat the competition alive; blackberry in particular.
When the Ipad came I bought some more AAPL stocks.
I think the time to sell is now to be honest and it's because Samsung and the other Android phones. I bought an Android phone last week, and I gotta tell you, you are not missing anything from the Iphone. I think Android is about to put a lot of pressure on Apple and I wonder if they will react on time. Today I sold all my AAPL shares, and if it posts 5% decrease over 1 month above the S&P, I am shorting AAPL.
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