Thursday, May 27, 2010

Yes, AAPL Trades At Over $250; But It's Also Damn Cheap

AAPL is a total, major focus of mine. To me, though, the question is how can Apple be this cheap? Use the old 10-to-1 rule. You need to divide this stock by 10 to think about it. Would you buy a $25 stock at a 12 multiple that has $5 in cash, no debt and is growing at an accelerated rate -- perhaps as much as 20%? How about if it only had single-digit share in all of its market places? How about if it had new product cycles, several of them, happening all at once?

You would say it is a steal. But, because it is at $250, people feel it is expensive. And, because it has passed MSFT in market cap, people are totally skeptical.

The thing that makes me feel skeptical: How can Microsoft be that big? Or XOM, for that matter, my least favorite major oil?

long AAPL

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