Long term investor now getting nervous

  • Posted: 14 October 2009 07:35 AM #16

    dmiller - 13 October 2009 07:01 PM

    As someone who’s also extremely long, and who’s ridden things up and down twice now in the past two years: I can understand those feelings…:-)
    ***
    I agree with DT and Sponge. And I’m feeling much, much better now than earlier this year.

    If Tommo were here (or is still listening), I’m sure he’d have a few supremely positive things to say as well.

    Yep Dmiller it sounds like we are in the same boat. I also could do with Tommo’s take on things and some more of his humor..

         
  • Posted: 14 October 2009 10:58 PM #17

    None of us have a crystal ball. But looking at Apple’s product position, some knowledge from public statements and insights from various sources concerning the product road map, strength of balance sheet and the prospects for the iPhone, I see two to three years or robust growth ahead for Apple. I’d like to sat five years but no one can accurately look that far out at this time.

    I intend to stay put to $300 per share and my outside goal is $500 per share. At a half-trillion dollars in market cap the headwinds on high percentage share price appreciation become much stronger and it becomes much more challenging to maintain a consistently torrid pace of revenue and earnings growth. That doesn’t mean Apple would become any less of the company it is today, but sustaining growth inertia becomes more of a priority than efforts to accelerate the pace of growth itself. As the company gains mass the pace of growth will slow. But I see few limits on growth for the next two to three years and already see $300 per share well within reach.

    I think sponge has set a more aggressive price target over the next five years but I believe, based on overall market conditions and the success of Apple’s next new product (the much-anticiapted tablet) as well as the sales prospects for the iPhone, $500 per share could be reached in the three to five year timeframe. Again, I don’t pretend to be an expert nor do I wish to be perceived as giving advice, but that’s where I see Apple today and expectations for the next three to five years.

         
  • Posted: 15 October 2009 12:17 AM #18

    How do these share price valuations jive with market cap?

    At a share price of between $300 and $500 Apple’s market cap would be between 268B and 448B placing Apple among the top three largest companies in the world (based on market capitalization). I realize this assumes that Exxon, PetroChina, and Microsoft share prices don’t rise while Apple’s does, but seriously, do you really think Apple can support a valuation that high?

    I agree with the original poster that he has good reason to be nervous about Apple’s current valuation. A good friend told me once that it’s wise to pick a price and set your stops. You can always raise your stops if the price continues to climb, and you’ll sleep a lot better at night.

         
  • Posted: 15 October 2009 12:49 AM #19

    Francisco Geraci - 15 October 2009 03:17 AM

    How do these share price valuations jive with market cap?

    At a share price of between $300 and $500 Apple’s market cap would be between 268B and 448B placing Apple among the top three largest companies in the world (based on market capitalization). I realize this assumes that Exxon, PetroChina, and Microsoft share prices don’t rise while Apple’s does, but seriously, do you really think Apple can support a valuation that high?

    I agree with the original poster that he has good reason to be nervous about Apple’s current valuation. A good friend told me once that it’s wise to pick a price and set your stops. You can always raise your stops if the price continues to climb, and you’ll sleep a lot better at night.

    I was told the same thing.  However, it never made any sense to me.  Better to pick a revenue/profit target and what the price might be at that level and then track it’s growth.  I’m with many here that believe their market share is so small in the pc and handset market that the prospects for sizeable growth remains.

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    Posted: 15 October 2009 12:50 AM #20

    Francisco Geraci - 15 October 2009 03:17 AM

    How do these share price valuations jive with market cap?

    At a share price of between $300 and $500 Apple’s market cap would be between 268B and 448B placing Apple among the top three largest companies in the world (based on market capitalization). I realize this assumes that Exxon, PetroChina, and Microsoft share prices don’t rise while Apple’s does, but seriously, do you really think Apple can support a valuation that high?

    I agree with the original poster that he has good reason to be nervous about Apple’s current valuation. A good friend told me once that it’s wise to pick a price and set your stops. You can always raise your stops if the price continues to climb, and you’ll sleep a lot better at night.

    After accounting for depreciating dollar, it is possible.

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    Posted: 15 October 2009 01:01 AM #21

    Francisco Geraci - 15 October 2009 03:17 AM

    How do these share price valuations jive with market cap?

    At a share price of between $300 and $500 Apple’s market cap would be between 268B and 448B placing Apple among the top three largest companies in the world (based on market capitalization). I realize this assumes that Exxon, PetroChina, and Microsoft share prices don’t rise while Apple’s does, but seriously, do you really think Apple can support a valuation that high?

    I agree with the original poster that he has good reason to be nervous about Apple’s current valuation. A good friend told me once that it’s wise to pick a price and set your stops. You can always raise your stops if the price continues to climb, and you’ll sleep a lot better at night.


    The problem with stops on AAPL is that if you have them within 10% of the market price you are susceptible to being yanked out of your position during any day. I have seen AAPL move down $17 and recover in 10 minutes. I understand the cautious feeling, a couple of years ago many here were planning a party (me incl). Then someone took our balloons, cake, and stripper. I don’t want to go through that again. Thursday may be more important than when Apple reports. If you look at the companies that report tomorrow along with the data it scares the crap out of me. I own a couple of shares of GS so I have a reason to be chewing my nails. For those who got in when the stock was 60 or lower, I just can’t understand the worry, is there a better company out there, no way. Apple just came through a horrible recession almost unscathed and with truckloads of cash. If you take the value of the company and look at the balance sheet compared to other companies, if the same market standards were used, AAPL is undervalued. JMO of course. I am invested in multiple stocks, by the way. i have a different perspective. :apple:

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    Posted: 15 October 2009 01:25 AM #22

    Francisco Geraci - 15 October 2009 03:17 AM

    How do these share price valuations jive with market cap?

    At a share price of between $300 and $500 Apple’s market cap would be between 268B and 448B placing Apple among the top three largest companies in the world (based on market capitalization). I realize this assumes that Exxon, PetroChina, and Microsoft share prices don’t rise while Apple’s does, but seriously, do you really think Apple can support a valuation that high?

    I agree with the original poster that he has good reason to be nervous about Apple’s current valuation. A good friend told me once that it’s wise to pick a price and set your stops. You can always raise your stops if the price continues to climb, and you’ll sleep a lot better at night.

    http://www.macobserver.com/tmo/forums/viewthread/56555/

    It is important to point out that aapl was growing at 30% when the economy was starting to slide in middle of 07 and grew at about 7% a year later.  In the last two years we have sold about 30 million iPhones and iTouches in the worst economy ever.  Fast forward 4 years, and one can clearly see that some of us still see a huge potential of explosive growth once the economy turns around following the success of the iPhone.

    We felt the iPhone was a big hit, but none of saw the success of the iTouch and its potential.  My dream of a touch OS is coming true when the Tablet comes out next year, but I think Lion will blow many away like Leopard two years ago.

         
  • Posted: 15 October 2009 01:44 AM #23

    Francisco Geraci - 15 October 2009 03:17 AM

    How do these share price valuations jive with market cap?

    At a share price of between $300 and $500 Apple’s market cap would be between 268B and 448B placing Apple among the top three largest companies in the world (based on market capitalization). I realize this assumes that Exxon, PetroChina, and Microsoft share prices don’t rise while Apple’s does, but seriously, do you really think Apple can support a valuation that high?

    In a word: Yes.

    Francisco Geraci - 15 October 2009 03:17 AM

    I agree with the original poster that he has good reason to be nervous about Apple’s current valuation. A good friend told me once that it’s wise to pick a price and set your stops. You can always raise your stops if the price continues to climb, and you’ll sleep a lot better at night.

    I slept as well in the past year when Apple’s share price was less than half of what it is today and I don’t expect to sleep any better when the share price more than doubles from where it is today.

    But back on the specifics. I expect both GOOG and AAPL to surpass the market cap of MSFT and Exxon/Mobil. I expect Apple to surpass MSFT’s market cap within the next two years.

         
  • Posted: 15 October 2009 02:08 AM #24

    omacvi - 15 October 2009 04:25 AM

    We felt the iPhone was a big hit, but none of saw the success of the iTouch and its potential.  My dream of a touch OS is coming true when the Tablet comes out next year, but I think Lion will blow many away like Leopard two years ago.

    Oh, but you are forgetting that Windows 8 will launch 2 years after that!  :-D

         
  • Posted: 15 October 2009 02:33 AM #25

    mbeauch - 15 October 2009 04:01 AM

    i have a different perspective.

    Yes. You have a different perspective. You are responding to comments from a person who seems astonished we have the audacity to believe AAPL’s market cap will eventually exceed the market cap of MSFT. I have a different perspective as well.

    I remember an infamous statement by the founder and CEO of a computer company who once said in response to a question that if he headed Apple he would sell off the assets and give the money back to the shareholders. We all know the person was Michael Dell. I see the same lack of foresight in the comments of people who don’t believe or find it hard to believe Apple will soon (within two years) surpass MSFT in market cap.

    As for Mr. Dell, Apple’s market cap is now almost 6x that of the company he founded and leads. In fact, the Dell management team(s) over the past several years have spent more shareholder cash buying back shares in a desperate effort to prop up earnings per share than the company is now worth.

         
  • Posted: 15 October 2009 08:29 AM #26

    DawnTreader - 15 October 2009 05:33 AM

    As for Mr. Dell, Apple’s market cap is now almost 6x that of the company he founded and leads. In fact, the Dell management team(s) over the past several years have spent more shareholder cash buying back shares in a desperate effort to prop up earnings per share than the company is now worth.

    You never know.  Dell might make their huge comeback if we buy enough Latitude D620 batteries smile

         
  • Posted: 15 October 2009 11:23 AM #27

    The batteries just went off sale…  grin

         
  • Posted: 15 October 2009 12:10 PM #28

    OK. I’ll make my market capitalization statement in a different way.

    Right now, Apple has a market cap that exceeds IBM (166B), Johnson & Johnson (167B), Proctor & Gamble (167B), Google (169B), BP (170B), and is just shy of GE (176B).

    I believe that Apple’s current valuation makes some sense, but at higher prices, I have to ask myself “Do the higher valuations make sense when compared to other large cap companies?”.

    Of course market cap is not the only measure to go by, and Apple’s growth has to be factored in. I’m just sayin’ that I understand the nervousness of the long term investor, which was the premise of this thread.

    A long time ago I worked for a very big innovative companies (JNJ, BDK) with good profit margins and good growth prospects. I know what that feels like. Somehow, Apple just doesn’t feel as big as it’s current valuation says it is. That’s just my gut talking but that’s also what makes me cautious about increases in Apple’s future valuation ( right or wrong).

    P.S. I’m a huge Mac fan and longtime Apple fanboy. I currently own Apple shares.

    [ Edited: 15 October 2009 12:18 PM by Francisco Geraci ]      
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    Posted: 15 October 2009 12:16 PM #29

    DawnTreader - 15 October 2009 05:33 AM
    mbeauch - 15 October 2009 04:01 AM

    i have a different perspective.

    Yes. You have a different perspective. You are responding to comments from a person who seems astonished we have the audacity to believe AAPL’s market cap will eventually exceed the market cap of MSFT. I have a different perspective as well.

    I remember an infamous statement by the founder and CEO of a computer company who once said in response to a question that if he headed Apple he would sell off the assets and give the money back to the shareholders. We all know the person was Michael Dell. I see the same lack of foresight in the comments of people who don’t believe or find it hard to believe Apple will soon (within two years) surpass MSFT in market cap.

    As for Mr. Dell, Apple’s market cap is now almost 6x that of the company he founded and leads. In fact, the Dell management team(s) over the past several years have spent more shareholder cash buying back shares in a desperate effort to prop up earnings per share than the company is now worth.


    What did I say to get that response? Comparing Apple to Dell is not even reasonable, Apple sells a complete product line. As for the market cap, I don’t believe AAPL will ever pass Exxon, not in my lifetime anyway.

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  • Posted: 15 October 2009 12:38 PM #30

    Francisco Geraci - 15 October 2009 03:10 PM

    A long time ago I worked for a very big innovative companies (JNJ, BDK) with good profit margins and good growth prospects. I know what that feels like. Somehow, Apple just doesn’t feel as big as it’s current valuation says it is. That’s just my gut talking but that’s also what makes me cautious about increases in Apple’s future valuation ( right or wrong).

    Sneaky little suckers aren’t they?  smile

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    I don’t mind being wrong…,I just hate being wrong so FAST!