Kyle Hickey is a professional investor with over 15 years of industry experience, and a few degrees, to his name. Somewhat of a technical/fundamental hybrid, his strategies usually revolve around the estimated and perceived value of a company. Investing aside, Hickey calls the ski hill his... More
Couple these numbers with 2010 esitmates of $6.70 EPS and products that consumers are truely passionate about and I think you have a solid addition to your portfolio.
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The Future of Apple
Closing the week at $166.78 (After hours, 166.52), I think that Apple is still a good play with plenty of upside potential... here's why:
Zack's is estimating an EPS of $5.81 for FY ending September 27, 2009 (lets assume an accuracy range of about $5.40 - 6.20).
A quick price history of Apple:
Year EPS P/E Ratio
2008 5.48 30.94
2007 4.04 37.99
2006 2.36 32.96
2005 1.64 32.69
2004 0.75 25.03
2003 0.19 54.47
2002 0.18 40.89
Excluding the highest (54.47) and the lowest (25.03) P/E, we can calculate an average P/E of 35.02 over the last seven years.
...If
EPS = $5.40 & P/E = 35.02, AAPL = $189.13
EPS = $5.81 & P/E = 35.02, AAPL = $203.49
EPS = $6.20 & P/E = 35.02, AAPL = $217.15
Now, ranging our P/E ratio from 30 - 40:
EPS = $5.40 & P/E = 30.00, AAPL = $162.00
EPS = $5.81 & P/E = 30.00, AAPL = $174.30
EPS = $6.20 & P/E = 30.00, AAPL = $186.00
EPS = $5.40 & P/E = 40.00, AAPL = $216.00
EPS = $5.81 & P/E = 40.00, AAPL = $232.40
EPS = $6.20 & P/E = 40.00, AAPL = $248.00
Couple these numbers with 2010 esitmates of $6.70 EPS and products that consumers are truely passionate about and I think you have a solid addition to your portfolio.
At close today, AAPL P/E = 29.15.
Disclosure: Long AAPL
At 457, Google is Still A Bargin
Zack's is estimating an EPS of $18.94 (high: 19.40, low: 18.32) for FY ending December 31, 2009.
A quick price history of Google:
Year EPS P/E Ratio
2008 15.80 19.49
2007 13.29 52.03
2006 9.94 46.33
2005 5.23 79.32
Excluding the highest (79.32) and the lowest (19.49) P/E, we can calculate an average P/E of 49.17 over the last four years.
...If
EPS = $18.94 & P/E = 49.17, GOOG = $931.43
EPS = $18.32 & P/E = 49.17, GOOG = $900.79
EPS = $19.40 & P/E = 49.17, GOOG = $953.90
If you feel that a P/E of 49.17 is too high, consider a much lower P/E of 30.
EPS = $18.94 & P/E = 30 GOOG = $568.20
EPS = $18.32 & P/E = 30 GOOG = $549.60
EPS = $19.40 & P/E = 30 GOOG = $582.00
Should earnings come in at the lowest estimate of $18.32, then breakeven ($457.10) would require a P/E of 24.95, low by our calculations.
At close today, GOOG had a P/E of 31.77.
Disclosure: Long GOOG