Why Do The Experts Keep Saying Apple Is Overvalued At $300B? We Disagree and Why.

[ 1 ] January 3, 2011 |

I was just speaking with Fred from Lange Financial Services about the markets and expecially Apple. He brought to my attention that he simply does not agree with these “experts” and “analysts”, and their skepticism and warnings about APPLE and the magic $300 Billion Market Cap as being overvalued. He pointed out some historical issues below along with current day facts.

In 1999-2000, you had Microsoft, Cisco, Intel, and General Electric all trading at Market Caps in the vicinity of $600 Billion EACH, and trading around 40-50 times earnings at the time.

Now, in 2011, we have Apple, the best technology company in the world as well as the world’s TOP Retail company, trading at a Market Cap of $300 Billion, and only at lets say 16 times earnings! How is this Overvalued? If anything its undervalued and we would still be strong buyers of Apple on any weakness. Lets not forget too the $55+ Billion in cash on the books too at present. The company is growing at more than 25% annually to boot! I would think too this is bullish for the many of the other tech shares we are following and trading.

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Category: General, Markets and Trading, Technology

  • Its hard to argue with Fred on this. His historical points are well taken. The companys dominance in innovation and technology certainly put it in a league of its own. The fact that they are sitting on 50 Billion in cash is incredible and puts them in unique position to purchase whatever technolgy or intellectual property they may want and do not develope on their own. At 40 times earnings AAPL would trade at around $600. Maybe Apple is cheap!