Apple (AAPL) is known around the world as the maker of high quality computers and electronics. It’s products, such as the iPhone, are often called revolutionary. Not long ago it was the company with the single largest market capitalization in the world, but with the death of founder and CEO Steve Jobs, the stock price has since reflected investors’ doubt in the company without Jobs. It has actually become somewhat of a fad to doubt the company.
It’s shocking that investors have so quickly forgotten that this is the same company that brought the world genre defining products like, iTunes, the iPod , the iMac, the iPhone, and the iPad. But some analysts have started to suggest that the worst of the stock declines might be behind us. Apple has been labeled the best, most admired company in the world by 3,800 executives and directors polled by Fortune magazine. Compared to competitors like HP and Microsoft, Apple is the reigning defending world champion of the business world’s admiration.
When graphed, both Apple’s 12 month cash from operations and its quarterly revenue per share show very positive trends. The company generates 16 billion dollars in revenue per quarter. However, the recent downward sloping stock price seems not to care. Apple’s share price currently sits around $462 and is trading with a trailing PE just over 10, with a PEG of 0.55. This implies that the current price of the stock is only reflecting half of the current growth rate of the company. Amazon (AMZN) by comparison has a current share price of about $255, and they lost money last quarter. Amazon’s PE is over 71 and their PEG ratio is 4.33. These ratios suggest overvaluation. When playing this sector against come of the other most commonly traded sectors, some interesting investment prospects can be found.
Despite the downward sloping share value, and recent fad of doubting Apple’s future, the facts show otherwise. The facts show that Apple has time and time again revolutionized the consumer electronics industry. Apple has massive cash reserves, and revenues. Their revenue per share is trending up. They have been the “Most Admired” company in the world for the past six years. Compared to similar companies, Apple is currently deeply undervalued in the market. Considering this undervaluation, Apple’s stock is ripe to provide great gains to investors.
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