The Apple Slingshot is Primed

  • Posted: 17 April 2011 12:15 AM

    An insightful article that is worth reading.  Has it really become this obvious?

    http://tech.fortune.cnn.com/2011/04/16/the-apple-slingshot-is-primed/

         
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    Posted: 17 April 2011 12:53 AM #1

    Mikedmvp - 17 April 2011 03:15 AM

    An insightful article that is worth reading.  Has it really become this obvious?

    http://tech.fortune.cnn.com/2011/04/16/the-apple-slingshot-is-primed/

    I have been waiting since Sept.  We are only $5 higher and still waiting 6 months later.

    The problem is that the sling shot may only take us to 364 if we are lucky.  I don’t see higher then 350 after earnings and that is a best case scenario. 

    Something as taken place in the last 6 months where the stock is becoming more and more disconnected from the company sales and profits.

    When we are flat from Jan 1 and the market is up 6% I smell something and obviously the gov and the company is powerless to do anything about it.

         
  • Posted: 17 April 2011 12:56 AM #2

    Mikedmvp - 17 April 2011 03:15 AM

    An insightful article that is worth reading.  Has it really become this obvious?

    http://tech.fortune.cnn.com/2011/04/16/the-apple-slingshot-is-primed/

    Please see my comments in the comment section of the post.  grin

    Remember, my name is Robert, but you can still call me DT.  LOL

         
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    Posted: 17 April 2011 12:59 AM #3

    DawnTreader - 17 April 2011 03:56 AM
    Mikedmvp - 17 April 2011 03:15 AM

    An insightful article that is worth reading.  Has it really become this obvious?

    http://tech.fortune.cnn.com/2011/04/16/the-apple-slingshot-is-primed/

    Please see my comments in the comment section of the post.  grin

    Remember, my name is Robert, but you can still call me DT.  LOL

    I have been reading.

    Robert your style of writing and message is so obvious and clear that I can see it is you before I read to the bottom to see the author’s name.wink

         
  • Posted: 17 April 2011 01:34 AM #4

    omacvi - 17 April 2011 03:59 AM
    DawnTreader - 17 April 2011 03:56 AM
    Mikedmvp - 17 April 2011 03:15 AM

    An insightful article that is worth reading.  Has it really become this obvious?

    http://tech.fortune.cnn.com/2011/04/16/the-apple-slingshot-is-primed/

    Please see my comments in the comment section of the post.  grin

    Remember, my name is Robert, but you can still call me DT.  LOL

    I have been reading.

    Robert your style of writing and message is so obvious and clear that I can see it is you before I read to the bottom to see the author’s name.wink

    sponge, I’ll take that as a compliment for the AFB Margin Maven.  grin

         
  • Posted: 17 April 2011 02:09 AM #5

    DawnTreader - 17 April 2011 03:56 AM
    Mikedmvp - 17 April 2011 03:15 AM

    An insightful article that is worth reading.  Has it really become this obvious?

    http://tech.fortune.cnn.com/2011/04/16/the-apple-slingshot-is-primed/

    Please see my comments in the comment section of the post.  grin

    Remember, my name is Robert, but you can still call me DT.  LOL

    Why DT if you don’t mind me asking?  By the way, I read through the comments and appreciated what you said.  One follow-up question.  I have a hard time understanding why investors, with thousands of publicly traded companies available to them, invest in companies such as Amazon, Netflix, etc. with ridiculous P/E ratios and less growth.  Is it the market cap that scares them?  And why, in a global economy like today, doesn’t the market reward a company like Apple when it is obviously undervalued?  Shouldn’t Apple be littering the screen of every high-tech trader signaling buys until it is fully appreciated?

         
  • Posted: 17 April 2011 02:09 AM #6

    DawnTreader - 17 April 2011 03:56 AM
    Mikedmvp - 17 April 2011 03:15 AM

    An insightful article that is worth reading.  Has it really become this obvious?

    http://tech.fortune.cnn.com/2011/04/16/the-apple-slingshot-is-primed/

    Please see my comments in the comment section of the post.  grin

    Remember, my name is Robert, but you can still call me DT.  LOL

    Why DT if you don’t mind me asking?  By the way, I read through the comments and appreciated what you said.  One follow-up question.  I have a hard time understanding why investors, with thousands of publicly traded companies available to them, invest in companies such as Amazon, Netflix, etc. with ridiculous P/E ratios and less growth.  Is it the market cap that scares them?  And why, in a global economy like today, doesn’t the market reward a company like Apple when it is obviously undervalued?  Shouldn’t Apple be littering the screen of every high-tech trader signaling buys until it is fully appreciated?

         
  • Posted: 17 April 2011 03:15 AM #7

    Mikedmvp - 17 April 2011 05:09 AM
    DawnTreader - 17 April 2011 03:56 AM
    Mikedmvp - 17 April 2011 03:15 AM

    An insightful article that is worth reading.  Has it really become this obvious?

    http://tech.fortune.cnn.com/2011/04/16/the-apple-slingshot-is-primed/

    Please see my comments in the comment section of the post.  grin

    Remember, my name is Robert, but you can still call me DT.  LOL

    Why DT if you don’t mind me asking?  By the way, I read through the comments and appreciated what you said.  One follow-up question.  I have a hard time understanding why investors, with thousands of publicly traded companies available to them, invest in companies such as Amazon, Netflix, etc. with ridiculous P/E ratios and less growth.  Is it the market cap that scares them?  And why, in a global economy like today, doesn’t the market reward a company like Apple when it is obviously undervalued?  Shouldn’t Apple be littering the screen of every high-tech trader signaling buys until it is fully appreciated?

    First, “DT” is short for DawnTreader. I don’t know how many times in phone conversations with Mark he calls me DT instead of Robert.  LOL

    I don’t suggest comparing p/e multiples between companies in different industries. They don’t hold up.

    Earnings will drive AAPL higher. I no longer worry about the p/e ratio. I forecast AAPL will remain in a range of 18x - 20x times trailing 12-month earnings and with 75%+ eps growth, share price appreciation will occur over time.

    I don’t consider either Netflix or Amazon to be a buy at this time.

         
  • Posted: 17 April 2011 12:08 PM #8

    DawnTreader - 17 April 2011 06:15 AM

    I don’t consider either Netflix or Amazon to be a buy at this time.

    I’m impressed how well AMZN trades (P/E of 70+) in an environment where sales tax is a real threat to it.  In many states, brick and mortar stores are unpaid showrooms for Amazon and it’s only a matter of time before legislation forces it to collect sales tax.  Unless you live in Oregon (and other states without sales tax).

    With regards to Netflix, the content providers are not going to let it grow to a level of dominance like iTunes with music has.  A case in point: The selection of Netflix titles available to stream online is very restricted, lowering its appeal.  In fact, I’m ready to cancel the service altogether.  The fact that Netflix will be creating its own content is a weak counter strategy.

         
  • Posted: 17 April 2011 02:22 PM #9

    Mercel - 17 April 2011 03:08 PM
    DawnTreader - 17 April 2011 06:15 AM

    I don’t consider either Netflix or Amazon to be a buy at this time.

    I’m impressed how well AMZN trades (P/E of 70+) in an environment where sales tax is a real threat to it.  In many states, brick and mortar stores are unpaid showrooms for Amazon and it’s only a matter of time before legislation forces it to collect sales tax.  Unless you live in Oregon (and other states without sales tax).

    With regards to Netflix, the content providers are not going to let it grow to a level of dominance like iTunes with music has.  A case in point: The selection of Netflix titles available to stream online is very restricted, lowering its appeal.  In fact, I’m ready to cancel the service altogether.  The fact that Netflix will be creating its own content is a weak counter strategy.

    Netflix has a much bigger issue. The content owners are demanding royalties on each movie streamed. Distribution of discs is covered by the First-Sale Doctrine. This is a huge potential liability that may profoundly impact the economics of the Netflix streaming model.

    The sales tax issue is a real threat to Amazon. States are starved for revenue and in many jurisdictions consumers are obliged to pay use tax on the value of purchases delivered without sales tax collected. Congress may move on this issue (interstate commerce is constitutionally under the authority of the federal government) and there’s already heavy pressure to pass legislation to compel online merchants to collect sales tax on the purchase value of deliveries.

         
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    Posted: 17 April 2011 06:03 PM #10

    Mikedmvp - 17 April 2011 05:09 AM
    DawnTreader - 17 April 2011 03:56 AM
    Mikedmvp - 17 April 2011 03:15 AM

    An insightful article that is worth reading.  Has it really become this obvious?

    http://tech.fortune.cnn.com/2011/04/16/the-apple-slingshot-is-primed/

    Please see my comments in the comment section of the post.  grin

    Remember, my name is Robert, but you can still call me DT.  LOL

    Why DT if you don’t mind me asking?  By the way, I read through the comments and appreciated what you said.  One follow-up question.  I have a hard time understanding why investors, with thousands of publicly traded companies available to them, invest in companies such as Amazon, Netflix, etc. with ridiculous P/E ratios and less growth.  Is it the market cap that scares them?  And why, in a global economy like today, doesn’t the market reward a company like Apple when it is obviously undervalued?  Shouldn’t Apple be littering the screen of every high-tech trader signaling buys until it is fully appreciated?

    Here’s my take on your questions:

    1. The market has never had to deal with a mega cap growing at 70+% for any length of time - so there are no comps for appropriate valuation, PE, etc. And in the absence of comparable/historical data, I’m guessing that most investors prefer caution over exuberance.

    2. AAPL is already the 2nd most valuable company - even if you put a modest PE of 30 (given it’s growth rates), you get a company that’s worth 100B+ over the #2 company. Not a scenario that makes a lot of investors comfortable. It would help if there were others like AAPL, even if they were in other industries, so that AAPL wouldn’t be the lone ranger with 500B+ valuations.

    3. Most hedge/mutual funds are already invested in AAPL and I’m guessing many at the max level for any one equity - so getting the PE to jump substantially is not easy/possible without a whole new class of deep pocket buyers.

    Like DT, I believe the PE will remain in the high teens to low 20s, though the latter is looking increasingly difficult - post Wed, if we don’t get a big pop, the PE will compress to levels not seen in almost 18 months. I’m hoping that is not the case!

         
  • Posted: 17 April 2011 06:17 PM #11

    AHHA - 17 April 2011 09:03 PM

    Here’s my take on your questions:

    1. The market has never had to deal with a mega cap growing at 70+% for any length of time - so there are no comps for appropriate valuation, PE, etc.

    That’s one important and relevant observation.  grin

     


    [Edited to fix quote box]

    [ Edited: 18 April 2011 01:50 AM by DawnTreader ]      
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    Posted: 18 April 2011 12:08 AM #12

    The shelf life for investment articles is generally shorter than that for milk, but sometimes it’s profitable to read one as an historical lesson. Here’s one from Jason Schwartz on the Apple slingshot effect, dated 12/18/08.

    http://www.thestreet.com/story/10649048/1/apple-seven-reasons-shorts-love-it.html