I was widely criticized for that, especially as the price of the stock rose more than 10% in the week after, peaking at $426. Fans of the late Apple co-founder and his products pounded the table with my prediction and pounded the table for the stock.
But now, after a less-than-thrilling earnings report, Apple shares have fallen back to Earth. At the current PE multiple of 13.71, they're priced nearly at par with Matthews International (NASDAQ:MATW), which is in the business of producing marketing materials and (interesting) caskets and tombstones.
The Apple 4GS is still literally appointment buying in Hong Kong, the iPad continues to dominate the fast-growing tablet market, and Apple remains the 800-pound gorilla in the tech room. They are big enough to make Chinese entrepreneurs ask “how high” when it says “jump,” and how many U.S. companies can say that?
Now, admittedly, it is hard to move a $28 billion quarterly sales number, and $6.6 billion in quarterly net income, forward fast. It's the law of big numbers – as they grow they get tougher to increase at anything like their former rate. But IBM (NYSE:IBM) is nearly as big ($3.8 billion in net on $26 billion in revenue) and its PE is nearly 15. You really think Apple can't beat IBM? And remember, over one-fourth of Apple's current market cap can be accounted for by cash.
Apple stock has, in fact, done no better than that of Amazon.com (NASDAQ:AMZN) in the last month, which had $10.8 billion in sales its most recent quarter and sports a PE over 100, in part because it continues to invest ahead of demand with its cloud and the Kindle.
The bottom line is the bottom line. Tim Cook is no Steve Jobs, maybe he's no Jeff Bezos, but is he that much worse an executive than Ginny Remetty or Steve Ballmer?
He'd have to prove it to me first. At these levels AAPL is a screaming buy. Time for the post-Jobs haircut to end until there is something real to justify it.
Disclosure: I am long IBM, GOOG.
Additional disclosure: Bought the IBM many years ahead of Warren Buffett, and I don't feel like selling. I might buy into Apple at some point, but not right now. And there are those 20 shares of Google, which are up almost 20% from my purchase price this summer.