I don't know what to make of this, am I missing something?
The right question is “Are shares of Apple overvalued, fair-valued, or undervalued?” Apple currently has a total annual yield of 3.5% which is 2.9% from share buybacks and 0.6% from dividends. It’s P/E is 32 and it’s revenue growth rate last year was allegedly 28%. It used to have a P/E of between 10-15 but the Nasdaq 100 index has a P/E of 30. This leads me to believe Apple is fairly valued relative to it’s peers but it’s more shareholder friendly that it’s peers because of share buybacks, dividends and voting rights.
I believe the 3 Trillion dollar market cap is justified and that neither scares me nor encourages me. Most people are better-off because of Apple’s contributions to the world —- shareholders, consumers, and employees.
Warren Buffett says it’s far better to be invested in U.S. companies that have exposure to China rather than any Chinese companies directly. He also likes companies with a large cash position. Apple is both of those two things. In a flight to safety, Apple shares may actually go up instead of down.
My biggest concern for Apple is the recent, repeated IOS Zero-day software exploits.
Unlikely. AAPL may outperform in a flight to safety (which is different from going up). But the sheer amount of gamma that has squeezed AAPL suggests this may not be the case. A huge chunk of NDX is in a technical bear market, with the index held up by a few names. It’s very likely that in the next downturn, AAPL underperforms.
On one hand Apple sells a high volume of quality products. If you attempt to use one of these
https://www.samsung.com/us/tablets/tab-a7/
you can understand why Apple has a "monopoly" for good tablets and phones.
On the other hand it's also true that the stock market has gone up and up and up with no visible means of support. Even though the stock market has been largely unloved since the 2000 bubble pop and the 2008 rout, it was hovering between the high end of normal and the low end of "crazy bubble" before the Coronavirus came, GameStop and all that.
Historically AAPL was valued with a PE around to 10-15, but today it's trading with a PE over 30. This alone may not be a huge problem if it wasn't also for the fact AAPL's best growth years are likely behind them and they'll may struggle to continue to justify their valuation.
Over the last few years many stocks have seen significant multiple expansions without similar expansions in the fundamentals. On one hand it could be argued the multiple expansion seen in recent years has been justified given where interest rates are and the pandemic stimulus measures, but regardless of whether what we're seeing is the reflection of economic policy or a market bubble, it's clearly not sustainable.
The risk of course is that inflation starts to run away and the FED need to remove liquidity and raise rates much faster than the market is anticipating. In this scenario we'll see the opposite of what happened in 2020/2021 and stock multiples will drop like a rock. If you're a regular person though without significant amounts invested in the market then the risk to you is that inflation remains hot slowly eroding into your savings, wages and purchasing power. Either way, it's probably not great news and there's probably a reason why CEO's and insiders are selling their stock holdings at record rates.
P/E of 30, 85, and 310, respectively. Not exactly in the same league.
> AAPL's best growth years are likely behind them
You could encounter that opinion literally every year for more than a decade (PREDATING the introduction of the iPhone, because pundits said this about the iPod, and technically, they were right). Thermodynamics suggests that one day, this prediction will come true, but in terms of market timing, it has not proven a sound investment thesis so far.
Disclosure: I own stock in some of the companies mentioned here.
> reason why CEO's and insiders are selling their stock holdings at record rates.
[citation needed]; and what are they putting this into? Real estate? Obviously if you fear inflation you aren't going to take it back to cash.
my top Google result
https://www.cnbc.com/2021/12/01/ceos-and-insiders-sell-a-rec...
I've seen an interview with this fund manager saying something along the lines of "this high P/E is the new normal, those companies are really better, more sustainable and profitable than their historical peers"... Maybe there's a bullish case there, or maybe so much money was printed and then funneled to financial assets and real estate.
i thought most of it stayed in the central banking system and it was up to banks to loan it out in order for it to reach common people. am i misunderstood?
It's been wonderful for shareholders. Everyone else gets to suffer from the ensuing inflation.
Little bits do trickle out but a huge percentage doesnt. Real estate being the exception, but id pretty much call us real estate a financial market anyway at this point.
"Apple reported total annual sales for 2021 of $365.8 billion, up a significant 33% from the $274.5 billion it reported in 2020. Gross margins for the 2021 year were up 45.6% from the year ago."
"Amazon revenue for the twelve months ending September 30, 2021 was $457.965B, a 31.62% increase year-over-year."
Go ahead and short the Standard Oils of today. If/when they are broken up, the sum of parts will be worth even more.
They have a lot of runway to pump those numbers when they are ready.
They have too little of marketshare for any market that they participate in.
Heck, even if Apple is required to allow third part app stores, their subscription services alone make a huge amount of money, and most users wouldn't want to leave the app store walled garden.
I shamefully must admit that I have become so desensitized to disaster that the tornadoes have not had the impact on me they would have had just a few short years ago.
The fact that my focus is on the state of the economy rather than the tragedy of my fellow man is something that is going to make me self evaluate my priorities.
It's been a bizarre transition. At the peak of the pandemic New York was losing a 9/11 worth of people every week. The UK peak was 1,325, which exceeds pretty much any list of Famous UK Disasters - Aberfan, Piper Alpha, Hillsborough, Grenfell, Bloody Sunday, etc - put together.
I wonder if future historians will refer to it when recalling this moment in time, or if this will be just another mundane tick up in the history of the economy.
The fact that it has nearly tripled it's market value in just 3 years is amazing to me and some what terrifying TBH.
Instead, most of it went to propping up the system that benefits everyone a little bit, but benefits the very wealthy a lottttttt.
The solution is clearly to increase direct payment amounts to get better micro-voting about where value lies in the economy, and to siphon the net amount accumulating to the very wealthy with progressive taxes and a fully funded IRS that can utilize high tech to track law-skirting financial moves.
But of course this won’t happen, the democrats are already fighting to lower taxes for the rich who live on the coasts.
Oh well. These valuations driven by a small percentage of Americans who own all the stocks are mostly a sign that the wealthy who got a lot of money don’t know what to spend it on (that’s why it’s better to pay Americans directly… on average).
They’re willing to go international.
And just think of all the things they could be doing but aren’t. Servers. PCs. Software. Social networking.
Anything they want.