globalbusy - Thanks for reading. They announced in the earnings call they would be returning approximately 30 billion per year so I used that for my model . You are correct, if they used more money to buy back shares this year it would be more effective at the assumed prices.
mbogosi - This was just a pure earnings valuation model. It does not take into account any balance sheet items. But the cash hoard definitely adds an extra margin of safety to the investment.
Apple Just Invested In Shareholders [View article]
"the number of shares outstanding increases as dividends are reinvested."
The shares outstanding would only increase with dividends if Apple paid stock dividends, which they don't. Generally the main reason for the increase is employee/management stock options or warrants...
Apple: Is It Really Too Cheap To Ignore? [View article]
Alternatively, they could uses their massive cash hoard to issue cheap debt and buy-back shares, making it a win-win for themselves and investors by massively boosting EPS. I wrote a piece about buyback possibilities here: http://seekingalpha.co...
Cagdas, Thanks for commenting. As I mentioned in the article, all these figures were calculated using strict PE analysis. I took possible Net Income scenarios, then applied potential total shares outstanding, then gave the EPS result a PE based on the growth to determine share price. For the scenario you are referring to, the perpetual negative NI growth warranted a PE of 5.
I tend to agree with you that $180 is not realistic, even for 2016. My point for the article was to highlight how undervalued Apple is by conventional earning valuation standards, even if you take out you all of Apple's other assets.
Apple: Already (Essentially) A Private Company [View article]
I agree the buyback needs to be upped. Here's an article I wrote on the potential EPS boosts from different levels of buybacks: http://seekingalpha.co...
Investors Should Keep Apple In Their Portfolios [View article]
Added more at 408. Also have a large buy order at 385 if it gets there. Patience will win out for long-term investors here. It's going to be a wild ride, but those who stay the course will be rewarded.
Apple: Is It Really Too Cheap To Ignore? [View article]
I attempt (and sometimes fail) to put aside emotion when making investment decisions. When the "terrible sentiment surrounding the company" is only coming from analysts (not consumers) it doesn't bother me.
In today's world the media doesn't get to decide what is "cool." I pay more attention to what I see on social media when I am considering "cool factor." I still see a lot more posts and tweets about people loving their Apple products than Samsung products (though I will say I may be biased as I am an APPL shareholder and thus more likely to notice comments about APPL) .
As far as the Samsung ads go, I would NEVER feature a direct competitor in an ad. If your product is that good is should stand on its own merit. Bottom line is you are giving them free press, whether you are making fun of them or not. And as far as coolest commercial goes, I have to give it to the Surface RT with the click on keyboard. The good news is that product quality wins out in the end, which is why I think you will see Apple back on top in 2014.
If I have to sit through a bumpy ride to get there, it doesn't bother me, b/c I will still be banking a 2% (and hopefully growing) dividend on the way.
Apple: Is It Really Too Cheap To Ignore? [View article]
I was a bit surprised at the conclusion of your article. The whole time you are painting a rather exciting picture of APPL as a long term investment, then you say not to buy b/c Cook does not care about the short term stock price.
I realize his apparent lack of concern for short-term shareholders is troublesome in this day and age to most people, but I couldn't be happier b/c it has given me a change to get into an amazing company at a ground-floor price. Also there's a pretty famous guy from Omaha who couldn't care less what the price of his stock is in the short term...
The only thing I think Cook could be doing better for creating long-term value is pursuing a more aggressive buy-back plan with the stock price at these levels.
Apple: Learn From Andy Zaky's Mistake [View article]
HyperionT
I'd strongly recommend not trading on technical analysis (there is 0 proof it is successful in the long term). Sure, APPL could drop below $400, but no one can consistently guess the short-term fluctuation of an individual stock (which this article illustrated well). My recommendation would be to buy now with the intention of holding for 2-5 years (or longer). If the possibility of a further drop concerns you I'd recommend $400 puts (or $350 to be more conservative) or bullish put spreads (If you don't have 40k in cash to put up).
Apple: Learn From Andy Zaky's Mistake [View article]
Mano
So, you are saying APPL is not a buy now b/c of "trend," but that when the trend changes you want to buy.
So basically you are saying hold/sell at $420, but buy once it rallies to $500 (I'm not familiar with trend analysis, but I'm guessing a sizable upward move is needed to consider it a trend )?
Apple: Learn From Andy Zaky's Mistake [View article]
Ashraf - Nice article. It is very important to highlight that ANYONE can be wrong, no matter how solid their financial background our how "good" the idea is. It is my understanding that Zaky even missed out on Apple's big run-up in his bullish Apple fund b/c he was long bearish call spreads at the time, which further hurt his fund.
I am long APPL at 510, 440, and 430, myself, and couldn't feel more comfortable with my investment. It is a pure dividend growth play. Even with declining earnings (and the most pessimistic of analysts are calling for flat earnings) AAPL could raise the dividend every year for the next decade without a sweat. The drop in share price doesn't bother me because I have no intention of selling my shares.
Apple's Valuation Is Not Rational [View article]
Apple's Valuation Is Not Rational [View article]
Apple's Valuation Is Not Rational [View article]
Apple Just Invested In Shareholders [View article]
The shares outstanding would only increase with dividends if Apple paid stock dividends, which they don't. Generally the main reason for the increase is employee/management stock options or warrants...
Should Apple Repurchase Shares? [View article]
After the following overhaul's:
-added 10mil dilutive shares/year
-assumed share-price of $400 for 2013, then increasing $100 each year.
-assumed dividend increase of 15% per year
I came up with 825 million shares outstanding at the end of 2015 under the current plan.
I will be writing a follow-up article that uses this number, plus estimates for 2016 to come up with a more accurate fair value for Apple.
Apple: Is It Really Too Cheap To Ignore? [View article]
Should Apple Repurchase Shares? [View article]
I tend to agree with you that $180 is not realistic, even for 2016. My point for the article was to highlight how undervalued Apple is by conventional earning valuation standards, even if you take out you all of Apple's other assets.
Apple: Already (Essentially) A Private Company [View article]
Investors Should Keep Apple In Their Portfolios [View article]
Apple: Last Year I Said Sell -- Buy Now? [View article]
Apple: Is It Really Too Cheap To Ignore? [View article]
In today's world the media doesn't get to decide what is "cool." I pay more attention to what I see on social media when I am considering "cool factor." I still see a lot more posts and tweets about people loving their Apple products than Samsung products (though I will say I may be biased as I am an APPL shareholder and thus more likely to notice comments about APPL) .
As far as the Samsung ads go, I would NEVER feature a direct competitor in an ad. If your product is that good is should stand on its own merit. Bottom line is you are giving them free press, whether you are making fun of them or not. And as far as coolest commercial goes, I have to give it to the Surface RT with the click on keyboard. The good news is that product quality wins out in the end, which is why I think you will see Apple back on top in 2014.
If I have to sit through a bumpy ride to get there, it doesn't bother me, b/c I will still be banking a 2% (and hopefully growing) dividend on the way.
Apple: Is It Really Too Cheap To Ignore? [View article]
I realize his apparent lack of concern for short-term shareholders is troublesome in this day and age to most people, but I couldn't be happier b/c it has given me a change to get into an amazing company at a ground-floor price. Also there's a pretty famous guy from Omaha who couldn't care less what the price of his stock is in the short term...
The only thing I think Cook could be doing better for creating long-term value is pursuing a more aggressive buy-back plan with the stock price at these levels.
Apple: Learn From Andy Zaky's Mistake [View article]
I'd strongly recommend not trading on technical analysis (there is 0 proof it is successful in the long term). Sure, APPL could drop below $400, but no one can consistently guess the short-term fluctuation of an individual stock (which this article illustrated well). My recommendation would be to buy now with the intention of holding for 2-5 years (or longer). If the possibility of a further drop concerns you I'd recommend $400 puts (or $350 to be more conservative) or bullish put spreads (If you don't have 40k in cash to put up).
Apple: Learn From Andy Zaky's Mistake [View article]
So, you are saying APPL is not a buy now b/c of "trend," but that when the trend changes you want to buy.
So basically you are saying hold/sell at $420, but buy once it rallies to $500 (I'm not familiar with trend analysis, but I'm guessing a sizable upward move is needed to consider it a trend )?
Apple: Learn From Andy Zaky's Mistake [View article]
I am long APPL at 510, 440, and 430, myself, and couldn't feel more comfortable with my investment. It is a pure dividend growth play. Even with declining earnings (and the most pessimistic of analysts are calling for flat earnings) AAPL could raise the dividend every year for the next decade without a sweat. The drop in share price doesn't bother me because I have no intention of selling my shares.