Apple: Be Careful, There's A Lot More Downside Risk

May 19, 2022 7:15 AM ETApple Inc. (AAPL)269 Comments

Summary

  • Apple is a fundamentally strong company that will generate some business growth in the coming years.
  • The huge baseline means that relative growth won't be too strong, and at the same time, AAPL's buybacks are way less effective than they used to be.
  • AAPL shares have sold off considerably, but they are still far from cheap. In fact, another 30% share price drop could bring the valuation to the long-term average.
  • Looking for option income ideas that focus on capital preservation? I offer this and much more at my exclusive investing ideas service, Cash Flow Kingdom. Learn More »

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Article Thesis

Apple (NASDAQ:AAPL) is a fundamentally strong company, but its growth is not outrageously high. At the same time, shares trade well above the historical norm, which makes its buybacks less effective and which results in multiple

AAPL revenue growth forecast

AAPL revenue growth forecast (Source: Seeking Alpha)

AAPL shares outstanding
Data by YCharts

Apple diluted EPS
Data by YCharts

AAPL EPS growth forecast

AAPL EPS growth forecast (Source: Seeking Alpha)

Apple stock expensive
Data by YCharts

Apple earnings yield and 10-year Treasury rate
Data by YCharts

Is This an Income Stream Which Induces Fear?

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Disclosure:

I work together with Darren McCammon on his Marketplace Service Cash Flow Club.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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