Chad Brand

Apple's Good News Already Priced In

Nobody is refuting the fundamental story at Apple. I have been writing about it myself. The angle this time is about the stock price and what is priced in already, not the company growth outlook. Everybody already knows about the market share gains AAPL will achieve in the PC market, so the question to ask is, "what has the market already factored into the stock price?" and "how much should you be willing to pay for the stock?" At a forward PE of 25-30, a lot is being factored in already.

Best Buy Test Marketing Macs -- Should Boost Apple Retail Sales (AAPL, BBY)

David,

Apple's 2006 P/E is 27, well above average. While the stock is not cheap on an absolute basis or relative to its competitors, their strong balance sheet, superior growth rate, and the possibility for upside to current projections based on higher PC market share, a cell phone product launch, etc, leads me to think their is decent upside despite the high multiple.

James,

You are right that eMachines is exclusively in the low end market, which is why I referred to the Gateway brand. Gateway had desktops and notebooks in the $1000-$1500 range, which is the lower end of Apple's market. Apple tends to be higher end, so their cheaper machines will overlap with the higher priced models from the likes of Gateway and HP. I simply chose Gateway because they likely have the weakest brand loyalty out of bunch. It won't help anybody really, except Apple, should mass distribution with BBY take shape.