In 2001, Apple was having losses. During the following years, it didn´t make much money. However, starting in 2004, its EPS (Earnings per Share) jumped from 0.36 to 6.29. That is growth!!
Of course Apple doesn´t have any debt problem and its ROE (Return on Equity) is a considerable 23%. The last 5 years had an average P/E of 31, well above the market (16).
Using our GARP method to value stocks, in a decent environment, Apple should be priced around 450$. If it continues with the present growth it can reach 1000$, it´s difficult to find out new ideas or gadges in a permanent way though. If we are more prudent and use the mean between the market and Apple as P/E, we will get a price about 340$.
So, to sum up, we have prices starting at 340$ and then 450$ and even 1000$. According to our rules, it´s a long term buying opportunity below 270$.
23/06/2010
