

Why Apple shares are dirt cheap  - czhiddy
http://tech.fortune.cnn.com/2011/04/19/why-apple-shares-are-dirt-cheap/

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dgreensp
Answerers on Quora seem to agree that Apple is undervalued by the market based
on a fundamental analysis: <http://www.quora.com/Is-Apple-AAPL-a-value-stock-
now>

Seems like the point of the article is sound, though did anyone else find it
muddled in the middle? Seemed like there was some circular or backwards
reasoning, like that Apple's potential future growth makes its past growth
likely to continue, or that Apple's cash increases the stock's value even if
you ignore its cash.

My own take on investing in "growth" stocks is generally that I'm not going to
bank on already-hyped companies being under-hyped, like betting that while
everyone thinks Google will grow X big amount forever, it's actually even
bigger amount Y! Not very contrarian. However, it's possible the market
doesn't quite realize just how successful Apple is being right now.

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r00fus
> Seemed like there was some circular or backwards reasoning, like that
> Apple's potential future growth makes its past growth likely to continue, or
> that Apple's cash increases the stock's value even if you ignore its cash.

Apple's cash position projects power.

This is what fundie investors who subtract cash aren't factoring in. The
ability to make strategic buying purchases which constrain supply for
competitors is not easily calculated.

Here is their latest (publicly known) deal with Samsung:
<http://online.wsj.com/article/BT-CO-20110213-704284.html>

Now think about the "ability to make such deals" with valuations 10x that...
Can Dell, HTC or RIM do this? If not, then they are at a disadvantage, as
Apple could massively out-bid them on volume with key suppliers.

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shawnee_
Fair disclosure?

I looked all over the page and didn't see the "full disclosure" notice that
should be there regarding the author's ownership (or lack of ownership) of
AAPL stock. We get that the "contributor" is touting himself as an analyst,
but even in that case, it's still just opinion.

[edit]: Unless this is it? (From the very end of the article)

 _Given the recent rare opportunity to buy Apple at an extremely cheap
valuation, I've been betting on some 2011 Apple leaps over the past few weeks
and plan to remain long Apple for an extended period of time._ \-----

He should tell us that first.

~~~
AllenKids
Andy Zaky is a well known AAPL Bull and he has a track record of being far
more accurate than almost every Wall Street analyst.

He generally does not hold AAPL or any stock he comments on however. See his
seekingalpha bio page.

Fortune really should provides a mandatory disclosure though.

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wcgortel
There's significant risk (the potential permanent departure of an iconoclastic
chief executive) that is being incorporated into their stock price.

Also, analysis of the cash per share at a large technology company should
generally be viewed differently than it might be at a manufacturing company or
somewhere else. Tech companies are subject to violent earnings fluctuations
based on changes in consumer demand. Cash stockpiles are a hedge against that
eventuality in addition to an asset.

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jacques_chester
One theory I've seen for tech firms building up vast cash stockpiles is that
for many shareholders, dividends are not what they want. They want share price
growth, because of the relative tax treatments of dividend income and capital
gains.

Of course this will vary from country to country etc.

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gobongo
AAPL will keep going up because it always goes up, like home prices! You'd be
a fool not to buy shares.

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HockeyBiasDotCo
Maybe they plan to quit hating developers with violent-to-use dev tools soon!
:) That would be a plus!

~~~
danilocampos
They're showing the love to my bank account monthly. No complaints about
violent tools, either. Can you elaborate?

