I think any attempt at Gallows humor can be worthwhile. May be too soon but hey comedy often has a bite. By the way I think it is time to look back at the earnings reports for this quarter and farther back to compare how the market is treating stocks badly even if they reported good earnings. And some stocks which reported poor numbers are not being treated bad enough if the whole market is rerating P/E’s. Apple is basically being treated like the Iphone 13 cycle and the other products they refreshed and introduced was poor. According to CNBC
Amazon Forward PE 63 MSFT Forward PE 25.93 Apple Forward PE 23.18 Alphabet Forward PE. 19.91
Daniel: That’s what sources the wealth creation opportunities. If equity prices were always rational all the time, there would be fewer opportunities for real gains over and above the rate of inflation. Of course, there’s also the increased of not quite getting it right. I’m thinking of latecomers to the Netflix party so-to-speak, for example.
“If equity prices were always rational all the time, there would be fewer opportunities for real gains.,.”
Boy, do I disagree! Apple, for example, would have grown just as powerfully and be every bit as valuable if we didn’t have this insane circus: A growing company is a growing company, and for those not growing, a dividend is a dividend.
Joe: What do you consider to be a rational, fair value price for Apple on a per share basis? Anything below that is a potential profit opportunity. The lower the share price now, the greater the profit opportunity over time. If I recall correctly, you have a $300 price target on the shares. From today’s closing price to your target is a much greater profit opportunity than if the shares were currently priced at $250.
That’s not precisely what I said. I don’t do “price targets”. What I said at the time I wrote that was that I believe Apple should be valued at $300/share, Not sure when I said that, but it was around the time Apple hit its ATH, and just about the whole of tech was valued much, much higher than presently.
Why does when I said it matter? One of the variables for determining valuation is the valuation of similar products and services. When everything sinks, relative valuation also sinks.
So looking at relative valuation, IMHO Apple should be valued at roughly twice today’s value, or (142.56×2=) ~$285/share.
Note that some of that is “forward looking” value. Just as AMZN is granted a premium on its valuation for future growth, so should Apple. Of course, AMZN’s premium is based more on growth in revenue, while Apple’s premium is based more on growth in EPS.
Joe: IIRC, you submitted $300 as your price target for next April. Back to the point. If you believe Apple is fairly valued at $285, do you see a profit opportunity that’s greater in buying the shares in the $140 range versus the $250 range? Personally, I’m more apt to be attracted to an equity trading well below price targets than one that’s considered more fully valued. The difference between a current trading price and what an investor considers to be a rational value for an equity’s shares is the potential profit margin. I use distance from price targets in many of my research approaches.
1
May 12, 2022
Joseph Bland said:
@ Robert:
Again, I only sell.
0
May 12, 2022
Mark Visnic said:
@Fred
If I recall correctly, that quite is attributable to John Maynard Keynes, circa 1936.
It’s a great line.
Keynes also said:
Long run is a misleading guide to current affairs. In the long run we are all dead.
Philip Elmer-DeWitt has been covering Apple since 1983 — mostly for Time Magazine (28 years), later for Fortune (9 years), where he wrote a daily blog called Apple 2.0. [Read more.]
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Amazon Forward PE 63 MSFT Forward PE 25.93 Apple Forward PE 23.18 Alphabet Forward PE. 19.91
Tesla Forward PE. 63.96
Meta Forward PE 16.08
Per Gary Shilling, twice named Wall Street’s top economist in a poll conducted by Institutional Investor magazine, circa 1983.
Hopefully we’re invested, not over-extended. Hopefully this turbulence does two things: Make buybacks more effective; shake out the fluff.
“If equity prices were always rational all the time, there would be fewer opportunities for real gains.,.”
Boy, do I disagree! Apple, for example, would have grown just as powerfully and be every bit as valuable if we didn’t have this insane circus: A growing company is a growing company, and for those not growing, a dividend is a dividend.
That’s not precisely what I said. I don’t do “price targets”. What I said at the time I wrote that was that I believe Apple should be valued at $300/share, Not sure when I said that, but it was around the time Apple hit its ATH, and just about the whole of tech was valued much, much higher than presently.
Why does when I said it matter? One of the variables for determining valuation is the valuation of similar products and services. When everything sinks, relative valuation also sinks.
So looking at relative valuation, IMHO Apple should be valued at roughly twice today’s value, or (142.56×2=) ~$285/share.
Note that some of that is “forward looking” value. Just as AMZN is granted a premium on its valuation for future growth, so should Apple. Of course, AMZN’s premium is based more on growth in revenue, while Apple’s premium is based more on growth in EPS.
Again, I only sell.
If I recall correctly, that quite is attributable to John Maynard Keynes, circa 1936.
It’s a great line.
Keynes also said:
Long run is a misleading guide to current affairs. In the long run we are all dead.