Is Apple’s Stock a Bargain?

February 17, 2012 in Daily Bulletin

Apple’s share price now makes it more valuable than both Microsoft and Google combined. Yet Manjoo argues that there’s still plenty of room for it to rise:

  • During Jobs’ tenure Apple’s shares rose by more than 350%
  • However its revenues have grown even faster, so that the price to earnings ratio has declined.
  • Apple’s P/E ratio is ~14. To put that in context Google has a P/E of 20 and Amazon’s is an amazing 139.
  • Apple is not at its natural peak; rather it is at the cusp of a new era of growth. The iPhone may not dominate in smart-phone market share, but it does dominate smartphone profits, of which it commands 75%. The numbers in the tablet market are even more heavily skewed in Apple’s favour.
  • Smartphones and tablets have just begun to become popular and as more and more people adapt to the new technologies, Apple is poised to grab a significant portion of the revenues.

To read more about Apple’s future, its opportunities, and the performance of its new CEO click here.

Source: Slate