provengers666

Is Apple More Undervalued Than Other Tech Sector Stocks?

This article is a perfect example of why retail investors are clearly at a disadvantage when investing: they simply don't understand how the big money values these companies.

Firs: A growth company is NOT valued on the amount of CASH it has lying in its coffers. Unless the company issues a dividend or buys back shares, there cash is nothing but a safeguard against going out of business.

Second: The valuation metrics used by the pros is always forward-looking! Your analysis is simply looking at the past.

The following is a copy of a previous post where I compared AAPL & RIMM:

VALUATION: RIMM's EPS for next year is conservatively expected to come in at $4.74 giving them a yr/yr earnings growth rate of 32%. Meanwhile, AAPL's earnings for next year are only expected to grow 24%. RIMM is trading at a fwd-PE of 10 versus AAPL's 15.7. That means RIMM would have to rise 50% just to match AAPL's fwd-P/E, even though they are expected to grow FASTER.

Now, AAPL's cash position is nice to have, but it doesn't really help an investor. Take a look at a company like OVTI that makes the lenses and cameras for the cell phone industry. It has a net cash position of nearly $5.50/share and it was trading at around $7.00! It is poised to earn nearly $1.00 next year, so why is it trading so low?? Because of the expected growth rate. There are many other examples, but the point is that when you are supposed to be a tech growth company, the cash position is an afterthought....unless you're a novice retail investor like Andy. ;o)

Why It's Time to Buy Google, Apple

When everyone screams "the sky is falling" you are usually close to the bottom, or the end of the world. Either way, you can't go wrong by BUYING.