Apple: Happy with earnings upside.
Forward P/E of 18 is not a horrible valuation when you consider that something with an earnings profile of a bank should be in the low teens. Apple generates a ton of cash based on ZERO leverage. Let's see, how to calculate a current ratio for Apple (traditionally measure of companies ability to meet short-term debt requirements) - oh its easy because the denominator's zero. That's the kind of financial analysis I like to do, lazy person FSA, when performance is so rockin' that you don't have management and analysts trying to fudge decimal places on both sides.
Recent quarter earnings surprise based on robust iPhone sales, not new products like iPad, so its innovation pipeline has not really been tapped. Also I expect increased mac sales as enterprises adopt mac to avoid viruses and hackers, more users mean better enterprise software.
People complain that the company is so large - how can it grow any more? True, law of large numbers on a percentage basis should not grow much larger. Its still smaller than MSFT. But Apple is like 4 companies in one, a cell phone manufacturer, consumer electronics manufacturer, pc maker, and software - and its relatively small in all these industries.
There may come a day when Apple is targeted as being too big, or monopolistic and the government would ask for the company to be broken up. The parts would be greater than the sum.
Goldman: waiting to buy call options on Goldman. This lawsuit is simply not plausible.
Greek bonds: waiting to bet on default on Greek bonds in 3 years (sorry my Greek friends).
Subscribe to:
Post Comments (Atom)
Don't wait. think and act. :)
ReplyDeleteMDS, would love to, but a couple factors:
ReplyDelete- need to get clearance to trade options from my brokerage acct
- time value on options is expensive, as you know CFA level II. so these nice drawn out legal things will take a while to mature, like the same way everyone knew this bubble was going to pop (like in 2005 when my RE prof was laughing away), but just took some fits and finally popped. You can lose a lot of money if you act too soon. I've found that in general things happen slower than you'd expect in a completely rational way.
- Greek bonds, same thing. 3 years is a long time away, time value of options is expensive. Needless to say, doesnt make sense for the world's governments to continue printing money to fund deficits, so we can see where this one will go.