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IdeaInvestor Labels Apple "Diamond In The PC Rough"

by , 4:15 PM EST, March 21st, 2001

Kenneth A. Toudouze, CFA, of is called Apple a "diamond in the PC rough." The analyst cites Apple's very low P/E ratio compared to the rest of the industry and some other factors to say that Apple offers a good investment opportunity. In Mr. Toudouze's search for top tech picks in the S&P 500, and Apple placed the highest of all the tech companies they found. According to

We've been looking for "value" technology names within the S&P 500. First, we used BASELINE to sort through the names; then, we evaluated the data, based on recent percentage change in earnings.

Our findings? Only five technology names made the Top 50 -- no surprise. And believe it or not, Apple Computer tops the list, coming in at number 11. (Energy, Utilities and Basic Materials names comprise the Top 10.)

We also looked at how Apple ranks, relative to its peers, in terms of free cashflow per share, because producing cash is optimal when the economy is slowing down. The results are published in the table that follows. 

Despite what one might think of its products, Apple may be a money maker if the downward trend continues. Its price, relative to free cashflow, is half of that of its closest competitors, IBM and Dell. 

Mr. Toudouze says that Apple bottomed out in December and seems to be forming a head and shoulder bottom. He pegs 22 1/4 as the price Apple will reach in "one or two" weeks. For those wondering, Mr. Touduoze is a CFA, which defines as:

An individual who has passed tests in economics, accounting, security analysis, and money management, administered by the Institute of Chartered Financial Analysts. See also Registered Investment Advisor, Chartered Financial Consultant, Certified Public Accountant.

Check out the rest of the article for a handy chart and additional information.

The Mac Observer Spin:

This pronouncement was based on technical analysis and not anything dealing with Apple's ever improving product line, Mac OS X, or other issues related to Apple's operations.

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