Neil Hughes
After eight weeks of Apple's plummeting value, one analyst believes the selloff has reached a point of being "insanely insane."
Brian White of Topeka Capital Markets is baffled by the sharp selloff of Apple stock during the company's strongest quarter of the year. In the latest downturn, the company's value is off 28 percent from its peak in September.
He noted that Apple has delivered annual growth that is 13-fold greater than the S&P 500 over the last eight years. Despite this, Apple trades at a 20 percent price-to-earnings ratio discount when compared to the S&P 500.
"While we don't expect Apple to grow (earnings per share) by 92% per annum over the next five years, we believe 20-30% growth is reasonable based on the company' slow market share in mobile phones and PCs, combined with growth opportunities in tablets and new potential areas such as Apple TV," White wrote in a note to investors on Monday.
Apple stock price over the last three months, via Yahoo Finance.
Apple had $121.3 billion in cash at the end of its fiscal year 2012, amounting to nearly $128 per share, or 24 percent of the company's stock price. Even if Apple decides to pay out a higher dividend to investors, White believes Apple will still hold nearly $204 billion in net cash by the end of fiscal 2014, which would amount to $212 per share or 40 percent of the current stock price.
"As such, the dividends that Apple can afford to pay out in the future are significant," White said, "and there is no reason why Apple should not currently be paying out at least a 3-4% dividend yield (or $16-$21 per share) versus the current 2% yield (or $10.60 per share)."
Despite recent losses, Topeka Capital Markets is standing by its $1,111 12-month price target for AAPL stock.
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55 Comments
"Steve Jobs would never have gone meta."
Apple's P/E is astounding considering their product quality, margins, and market potential of current and future products.
its not about what they are doing. its about what will drive growth in the future. Apple TV is starting to feel distant and how many more ipad variations can they really do ? Apple Fan and Stock Holder
its not about what they are doing. its about what will drive growth in the future. Apple TV is starting to feel distant and how many more ipad variations can they really do ?
Apple Fan and Stock Holder
While Apple's hardware receives most of the focus, I think their greatest potential lies with their software. This is where the real profits lie, and they have only scratched the surface, here.
jobs is dead and apple stock will continue to drop because of all the other alternatives on the market
besides apple investements are in other countries they are not here as for capital gains remember you re elected the person in office romney offered 9.5 million jobs obama zero now we all will take a bite of the s*** sandwhich