.crazylegs..

Five Great Quality Companies: Are They Too Expensive?

1. GOOG is expected to put up $20 earnings in 2008 and it has $40 cash per share. SO, net of cash it is valued at 22.5x 2008 earnings.
2. AAPL EPS means little. Show me the cash! They have generated $6 per share of cash in the first 3 quarters and will generate at least another $1 to $1.50 per share in cash in Q4. With $23 per share cash on the balance sheet, it trades at about 18x 2008 cash flow net of cash - and you are paying for that figure for the year ending in 2 months! It gets even cheaper if you look at 2009.
3. RIMM might appear most over valued but it has the best growth potential. iPhone is serving to HELP them in a big way by bringing tons of attention to the smart phone space. Seems strange, but the reason for this is simply price of data. They will ride the demand elasticity curve for data services as they continue to work with carriers to offer lower data plans (tmobile $10 BB plan?, pre-pay BB plans?) The company has said they see huge volume increases anywhere they get the carrier to lower data pricing. Demand elasticity is huge for data services - and they are the only handset maker who is in a position to work with carriers to lower data prices as RIM offers a compelling service with their email system. Combine that with cheaper handset prices (cheap flip, curve update coming) and you shouldn't be focused on whether the Bold or Thunder competes with the iPhone, but you should watch home many folks buy the BB flip (aka Kickstart) instead of that cheap LG, samsung, or moto when combined with a low priced email plan because the customer gets a great service for a small incremental fee.