Contributor since: 2012
Good article, but I have a slight correction to one of your statements. The closest call on margin was in Q3 2012 when they guided 41.5% and did 42.8%, which was a difference of 1.3%.
Interesting chart comparison, but I would like to know what the P/E was of those stocks that you mention at the peak. AAPL was in the low 16 TTM P/E when it was in the low 700 range. Were the other stocks that you mention in the same valuation range or were multiples much higher? A little bit of fundamental/valuation overlay on this purely technical analysis would make it very cool. Thanks for the post.
Absolutely no basis for iPhone numbers. You are writing as if there were no iPhone 5's in the USA at the beginning of the quarter, which is blatantly wrong. I had our assistants pick up iPhone 5's for our executives the day it launched and it only took 1-2 weeks to get them all, and that was back in late Sept / early Oct. We were table to get the white ones the same day. And, as another comment points out, I'd much rather buy a company with excess demand as opposed to excess supply. Supply is WAAAAY easier to solve than demand. Apple has the best possible problem you can have.
Your growth rate seems VERY low relative to most models and you only included 20B of cash, which is just one line on the B/S. Look at the long-term portion which is all in 16 month treasuries I believe. That will add A LOT more cash to your model and increase your share price by maybe another $100, even in your ultra low growth (GDP growth) scenario.
Thanks. If you wrote this a couple weeks ago I would say that we'll never see 522, but with the recent craziness I just don't know. Could be tomorrow if things keep up.
ycharts.com interactive charts is free and has some decent ratios, but the P/E ratio is not nearly as good as doing it manually in excel because it only adjusts every quarter or so. Very hard to trade off of, but if you want longer term direction it's not bad. That's generally what I use as a pre-check and then I go in and do it manually.
All companies mature, growth slows and P/E multiples come down, so I'm not being naive about this being a temporary range, I'm trading Feb '13 calls and am comfortable with the range until then. Once all the new products refreshes come out I'll have to see what APPL does before making any big bets on the 14-16 range. Hope this helps.
Thanks for the comment!
Depends on how the stock performs going into earnings really. If it's towards the higher end of the range I will probably sell before earnings while volatility is still high. If the stock is still less than 650 then I will probably hold, but I'll have to wait and see what kind of overall environment we're in when Jan comes around. Thanks for the comment!
I'm only trading through the Jan/Feb timeframe, partially because of the fiscal cliff stuff, but also for other reasons.
Ha, nice. I guess I can see that interpretation. What is your #1 question that you would like answered then?
I responded to this above. I had several small trades that were successful, but one big one for 2.6x with $1mm on the line. Geez, everyone is giving me hell over this.
I am a one stock trader and I make big bets using options. Some credit spreads and other naked calls. See my reply to you above about my "millions" comment.
I was not in apple when it fell $95. If you read my article I got out at 680. I know that what I do is risky and I know I can lose a lot. Why are you so angry?
You just seem bitter in all of your comments. "chasing dimes"??? Really, do you think I write here to make money? LOL. Cheer up man.
I actually didn't know SA pays to write, so that was just a bonus. I put $1mm down on Jan '14 400 strike leaps in November when the stock was around 380. I sold at 530 or so. My return was 2.6x, so I ended up with $2.6 million. Not sure what else you want to know, but it's not "fishy". Cheers.
My wife has a Google/Samsung Nexus phone and complains about it every day. It's a piece of junk. I used to have one as well and it was SUPER buggy. Would randomly shut down in the middle of a call, quit applications, freeze, just plain crappy. She is dying for an Apple, but just needs her contract to end. I think that's a pretty common theme.
YUP! I think I commented on this earlier. I used to HATE Apple, was a big Droid guy, loved my PCs. Well, the iPad was the gateway drug. Got that, then started opening up. Later got an iPhone when I got out of my Droid contract. It was just so simple to sync all my content. Then recently needed a computer, so I dropped another $3k on the new 15" MacBook Pro Retina (which I'm typing on now). I also bought about 6 20-pin to lightning adapters, hundreds of songs/movies, and every new gadget that came out. It all starts with the gateway drug, and just imagine, they are just getting started with that in China.
At $570 I'll exchange my Feb '13 calls for lower strike Dec '12 to catch the upswing on higher delta. At 565-570 there will no doubt be a whipsaw back.
I will also add, the iPad mini was open to online orders well before the in-store debut. Also, it's not a super new innovative product. Those that have an iPad 2 or New iPad probably aren't lining up. It's more of a price point defensive play, and frankly positioned great for education market. I'm not surprised by no big lines though - I never expected that to begin with.
I think in the overall realm of stuff to think about regarding Apple and stock price, this is lower down the list to be honest. As a capitalist I like the fact that Apple wrenches every dollar possible out of its suppliers - that's what it's supposed to do. If they need to, they have a ton of cash to prop them up (maybe as a JV), but Buyer Power is a powerful thing (Porters 5 forces). Apple clearly has a competitive advantage because of this and I'm not too concerned. There are 5 other things (a lot mentioned in article and comments) that are more important than supplier health.
There is no doubt the lack of the 14th week hurts, the question is how much. I personally don't think the 14th week is going to come anywhere near explaining 0% YoY growth. That would be crazy. Analysts will have to increase their estimates soon.
Thanks, good info!
Actually, I had bull call spreads that did not take that much of a hit at all on the way down. When we hit 600 or so I cashed those in (for a slight loss) for naked calls. So, I did not lose that much on the decline.
Also, if you read my article, I sold at 680 (16x P/E) on the way up and did not buy in again until 620. So, while I appreciate you guessing what money I may have made or lost, you are completely wrong. Good luck.
I believe in this especially when Wall Street trades on day to day news. That's the differentiation between traders and investors. Traders will play the news ups and downs and us investors will play the longer-term value outlook. I personally trade options exclusively (all long). I'm trading Feb '13 calls knowing that this is going to be a blockbuster quarter with all the refreshes and with the strong mgmt guidance (in my opinion - see earlier comments). I'm confident of where the stock will be in January, and I see these crazy dips as traders doing their thing. Let them do their thing - I've always been right with my investment thesis in the end. Can I be wrong this time, yes. That is all part of the game. Again, there are always two sides to a trade! Thanks for your comment!
Thanks Paul! I agree with you, but will play both sides here. I agree that in the near-term (1-3 years) we will enjoy the Apple bliss and everything we know Apple. Similar to Andyk80 I do have concerns about competitors catching up and what Apple is going to do differently. I have an iPhone 5 and besides the bigger screen it's not all that much better than my 4S. However, the brand, ecosystem, and the digital content monopoly is still strong and will be for the near-term. Will they release an iTV, who knows. If not, in 2-3 years I also begin to doubt what happens to Apple. However, Wall Street does not trade on this, they trade on iPad Mini lines and other short term fluctuations. That's why it's up to us as informed investors to make an educated call and stick with it. Let the day traders run the stock up/down. I actually WANT the stock to run down a lot just so it can skyrocket up again. Sound strange, but if it hits a hard bottom it will skyrocket up again. I agree that we will continue on post-jobs in the near-term, and I truly think the last contribution is the iTV, so we'll wait to see what happens there. I run a technology company as a CEO and I can tell you that I am focused on products at least 6-12 months out, so mainly focused on growth in the next 2-3 years. Jobs' contributions are not at all gone yet, I can assure you of that. I think we're going to see the biggest whipsaw of all time here based on a 575 dip today, but we'll see. I've been wrong more than once :) Cheers, and thanks for the comment!
Based on your background and profile you are 100% technical. I respect technicals and believe in momentum, so I hate to admit that I respect your opinions by association. However, if you would like to provide some actual constructive criticism using your purported technical knowledge (and qualify it), I'd love to hear your comments. Harry Potter and a bunch of other random comments above are not really helping your case. Do you have anything constructive to add? If you are a technical trader, show us your stuff and explain why, if not, then I'll assume you will not respond to this. If you do respond to this, please do not say something stupid again, because then I'll direct you to the Yahoo Finance forums. At any rate, I do appreciate all comments, let's just keep them constructive please.
If you would sell me shares right now at the current price I will buy from you all day long :) Would save us all the fees and then we can both put our money where our mouths are! In fact, I will check back here in one month and we'll see who is right.
Haha, thanks Matt. I'm just trying to explain my view. If it keeps going lower I may swap my Feb '13 OTM calls for Dec '13 closer OTM calls due to higher deltas and quicker recovery when we see this slingshot back. My Feb '13 calls are decreasing at delta of .25 and when I think we hit bottom I exchange for Dec '13 calls with delta of .40. If I'm wrong I'm hosed, but if I'm right. . . :)
Since I got flack earlier:
OTM = Out of the Money
As I always say, every trade has two sides. Good luck.
LOL, nice!
Interesting point, and I like where your head is at. Want to conduct the study!?!? :)
I like it in theory, but the first and last time I wrote any naked calls I got a massive whooping. If you can do it, go for it, but if you get caught it gets REAL ugly, trust me.
Huh, interesting insight, but a lot to throw that big of a stock off as much as it was today. It could have sparked a selling frenzy, but not accounted for it alone.
That is correct, and absurd in my opinion.