In my opinion Apple is a Strong Buy long time. I have done some basic FA and some case studies on possible growth opportunities. Let’s do the numbers on Apple:
Note: I have made the assumption (very reasonable) AAPL will meet the September quarter expectations next week.
Year ending Revenues Revenue YOY% growth Earnings
A company growing revenues at about 37% and earnings at an even higher pace should be trading at a much higher multiple than a future P/E of 28.16. The company has had real growth and the best is yet to come in the next 6 months.
The major revenue driver for Apple has been iPod over the years. iPod’s are again selling like hot cakes and will continue to do so in the holiday season. MacBooks have a small percentage of the market share and sales have picked up only in the last quarter. Apple’s advertising campaign has been very successful. The stock price doesn’t fully reflect the price that ought to be considering the traction for Macs. Macs are number one sellers on almost every web list you can get your hands on.
Add to this iTV. Walmart and Target that together account for 55% of DVD sales for studios are up in arms with the studios about Apple getting new movies for cheaper. The studios realize that DVD sales growth has stagnated. Downloading is the new mode of delivery. It’s cheaper for studios as manufacturing and packaging costs are not present and you don’t need to go to a store to buy a movie. The goal is to download a movie / TV show on your iTV and view it anywhere. Could be your TV, your video iPod just anywhere. Bottom line the growth that the company will have with the iTv sales are not factored in yet.
Just iTV and a bigger chunk of PC / Laptop market warrants another $30 – $40 price increase.
We have not even considered the new products that are in the pipeline and if you know Steve, you know he will surely have something up their sleeve in the next couple of months.