Saturday, November 19, 2011

Why Apple is a Bargain

 Subscribe in a reader Delicious Bookmark this on Delicious

Apple closed Friday near $375, ITZ suggested a 1/2 position at $380. If this market continues to pull back AAPL could test its 200ma around $362. Chart Link

ITZ 2012 earnings per share estimates $37, currently trading at 10xs forward. 3-5 year est growth rate of 30% puts a PEG at 0.30.
According to the company's recently filed 10-K, Apple actually has $9.8 billion in cash and cash equivalents $16.1 billion . Short-term marketable securities $26B,  long-term marketable securities $55.6B which comes to $81.6 billion, or approximately $88 per share. So back out the cash comes to $287 as share. Apple's ability to generate cash is impressive, for the 2012 fiscal year, it will likely post at least $120 billion in cash or $125 in cash per share.
With no debt and ability to generate tons of cash, Apple should at minimum be trading at 15xs forward earnings placing it at $555 a share.

No comments: