Apple Is the Best Value in Cramer's FADS CAN

Nov. 28, 2010 2:17 AM ETApple Inc. (AAPL)FFIV, CRM, DECK, CMG, AMZN, NFLX42 Comments
Richard Hyde profile picture
Richard Hyde
49 Followers

I am a fan of Jim Cramer, who hosts CNBC’s Mad Money. I usually follow him on my XM radio driving home. Lately, Jim has been publicizing his FADS CAN portfolio. He said recently

With so many money managers lagging the benchmarks because they didn’t manage their portfolios well, the big boys are going to have to chase momentum going into the end of the year. That’s one more reason to buy the F.A.D.S. C.A.N. names.

FADS CAN is a list of seven stocks that have done well and will continue to do well in the future based on their value proposition and growth in today’s marketplace. The stocks are F5 Networks (FFIV), Apple (NASDAQ:AAPL), Deckers (DECK), Salesforce (CRM), Chipotle (CMG), Amazon (AMZN), and Netflix (NFLX). All of these stocks have had huge run ups in the past year, but I thought I would compare them to identify any relative bargains. As a longtime Apple follower and owner, I was not surprised to see that Apple was the most undervalued compared to its peers on this list. I kept the analysis fairly simple, as each investor has their particular ratios and metrics to value a good stock. Below you can see the metrics chosen for comparison, all taken from Yahoo Finance to keep consistency.

On a current P/E Basis, Deckers noses out Apple for the low P/E, though its growth rate is only one third that of Apple. But what is interesting is how high several of the P/Es have become with Salesforce at 260, Amazon, Netflix and F5 in the 70s. The S&P average is about 15, so clearly several of these stocks are demanding a very rich price. Forward P/E, which is dependent on earnings estimates by analysts also show some very rich pricing. But here is where Apple sticks out, at a 14 P/E, its very close to

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Richard Hyde profile picture
49 Followers
Rick Hyde works in the aerospace and defense industry. His investment philosophy is buying growth at a reasonable price. He is also a retired military officer, former independent financial planner and held several positions in the IT and Defense industries. Rick is a graduate of the US Military Academy, with a graduate degree from Cornell University and an MBA from Colorado State University. Rick resides in Northern Virginia with his wife and two teenage sons.

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