AAPL - Sector: Technology - Industry: Computer Hardware

[setravis]

An 11 page thread on this stock started by ScottishTrader.
And a new one started today....never cease to amaze me....
Took a count on the search and it was 5  or 6 other threads......"Board Clutter" When we have a thread running like this on.

May as well leave the chart while I here.

[setravis]

http://www.3stocksonfire.org/trading/index.php?topic=2981.150

[njshiva]

An 11 page thread on this stock started by ScottishTrader.
And a new one started today....never cease to amaze me....
Took a count on the search and it was 5  or 6 other threads......"Board Clutter" When we have a thread running like this on.

May as well leave the chart while I here.

My mistake Setravis. I didnt pick the lastest thread. This thread is more appropriate with lot of info. I did a search and mistook the date posted column to last posted and picked the other one to update todays news.
atleast, I didnt start a new thread   

[setravis]

No problem Njshiva....
I remember ScottishTrader making a pick on this one,so I made a search to find his thread.
It's nice when everyone post to the same thread,it gives the history of a pick all in one place.
I call it Simplicity !!

[Melf Elf]

It could race to $80 near-term on the strength of a Cramer RE-RE-RE BOOYAH alone, if he decides to pump it again! 

Give the devil    his due...AAPL is above $80.

A few market lessons from this one:

1. Shorting bullish stocks is a tough game.

2. DON'T be patient with losing positions, especially short positions.

3. Gaps don't have to get filled, and if they do, it can take a long time. AAPL left several gaps awhile back that aren't filled, and its up 49% frrom the July, 2006 gap, from $55.

[David Randolph]

1. Introduction

Well, it took me two hours to read this 12 page thread, but I loved it  Especially Scottish Trader's analysis and Melf Elf's advice to nullzero. I bet that if nullzero goes back to read this entire thread he will clearly see how emotional he was about his short position on AAPL and his general bearishness on the general market. The big red flag came when AAPL reported nasty news about restating 4 years of results due to options accounting, and yet, the stock closed higher on the day ! But I understand why nullzero found it so difficult to cover his short position, he had a clear price target for the stock to meet on the downside. I also made this mistake a whole lot of times in my trading career.

I'll put my AAPL charts and my observations of those charts in this very rich thread too. If you're new to www.3stocksonfire.org and would like to join us on this journey for stock market knowledge, please register.

2. Profile

Apple Computer, Inc. (AAPL) engages in the design, manufacture, and marketing of personal computers and related software, services, peripherals, and networking solutions worldwide. It also offers a line of portable digital music players, accessories, and services. The company's products and services include Macintosh line of desktop and notebook computers; iPod digital music player; Xserve G5 server and Xserve RAID storage products; a portfolio of consumer and professional software applications; Mac OS X operating system; iTunes Music Store; and a portfolio of peripherals that support and enhance the Macintosh and iPod product lines. The company also sells various third-party products, including computer printers and printing supplies, storage devices, computer memory, digital camcorders and still cameras, personal digital assistants, iPod accessories, and various other computing products and supplies. In addition, it engages in the online distribution of music, audio books, music videos, short films, and television shows. Further, the company offers products and services for the educational industry, which include eMac, iMac, and iBook; video creation and editing solutions; wireless networking; student information systems; curriculum and professional development solutions; and one-to-one learning solutions. It sells its products primarily to education, creative, consumer, and business markets primarily through online, retail stores, wholesalers, resellers, and cataloguers. As of September 24, 2005, the company operated 116 stores in the United States; and 8 stores in Canada, Japan, and the United Kingdom. Apple Computer was co-founded by Steven P. Jobs in 1976. The company is headquartered in Cupertino, California.

3. Technical Analysis
3.1. All History Chart



AAPL's history took a turn for the best in 2003. The share price rose nine fold in just three and a half years.

3.2. Medium Term Chart



After a 42% drop over the January - June period, AAPL has been coming back to challenge its all time high level, at $86.40. The medium term trend is certainly bullish. Does Apple have the power to breakthrough the $86.40 resistance level and move on?

3.3. Short Term Chart



I bet it wasn't only nullzero to suffer from these big up gaps on AAPL. The short term trend is bullish, according to the 50 day SMA and the ascending trendline.

4. Fundamental Analysis
4.1. Number of Shares Outstanding



There was a steady rise in the share count from 1994 to 2003. Then the selling stopped, and probably that was a big help in driving the price per share upwards. The current market cap is $70.71 B.

4.2. Liquidity



With the exception of 1997, AAPL was always able to show a current ratio higher than 2, which is a sign of a responsible management. A bit of a deterioration lately, but of course AAPL doesn't have any liquidity problem, with $8 B in working capital and no long term debt.

4.3. Revenues



AAPL's revenues were not very reliable over the last 12 years. Look at those 3 years of revenue declines in 1996, 1997 and 1998, a time when the economy was booming. Only in 2003 AAPL started seeing steady revenue growth, and the share price responded accordingly.

But it seems it was much more of a multiple expansion than just revenue growth, because sales went up 211% since 2003, and the share price was up 800% 

The current revenue multiple is $70.71 B / $19.315 B = 3.66. The Personal Computers industry (I know AAPL is more than that) has an average sales multiple of 0.96, so, exclusively according to this measure, AAPL seems to be overvalued. It looks even more overvalued if we consider its revenue growth rate is lower than the industry's and its profit margin is roughly the same. You can check this data here.

4.4. Profits



It's hard to trust AAPL's profit trends after what happened in the past. Even considering this, investors are paying 36.5 times earnings for AAPL, which is a lot.

5. General Overview

I don't think AAPL's revenues and profits are growing, or will grow, enough to justify the current market valuation, so I figure the stock is overvalued. Does that mean I'm going to short it right away? Well, no, but if there's a catalyst, like an earnings miss or a general market breakdown, I believe AAPL will go down more than others in the same sector.

The market is pricing in very strong revenue and earnings growth going forward. You know that if the company just grows a bit, say, 10%, the stock will tank. This is what this analysis tells you, and not much more.

6. Trading Plan

From what you've read you know I'm not prepared to buy AAPL at current levels. The stock could naturally fall 30 or 40% just to get more "in line" with the general market. I'm not going short either, will continue studying stocks and waiting for opportunities. If you would like to receive my analysis on your mailbox (if you're not already registered with 3 Stocks), please register. Thank you !

[ScottishTrader]

Nice analysis David!!!

AAPL was the first stock I ever bought (in the spring of 2005) and man do I wish I held on to that initial position!!  It hgas been one of those tickers I have always watched, but have traded very poorly, never realising any significant profits, despite its run. 

I agree that apple is highly valued at this level, however, one should also take into consideration the fact that it is a really industry leader and innovator, and it is doing very well at converting its market share dominance in the digital music player and music market into market share gains in the PC space.  Apple is the ony computer manufacturer that has the real possibility to make significant market share gains in the PC space over the next 3-5 years.  They currently have something of the order of 3% if the PC market, which is dominated by the likes of Dell and HP.  However, Apple's advantage is that they are not tied to Microsoft in the OS space, and in fact have a vastly superior OS (well we will have to see what Vista finally looks like), that is tightly integrated and very easy to use, and they can convert users who are fed up with being plagued buy viruses and the like.  They are aggressively pursuing overall market share gain, and while they most likely will not penetrate the enterprise business market, they are getting much stronger within the personal and education markets.  For example, their laptop market share growth for the year is something on the order of 12-15%.

Add to this the fact that AAPL has beaten their guidance for every one of the last 8 quarters (and often beaten the streets ambitious estimates too), and I think there is actually a lot to justify their excessive multiples.  While I am also unsure if I would buy AAPL here, I think if it manages to break to new highs, it could easily have a christmas run like it did last year for a good 20% on expectations that they will (and they will) produce the best quarter of the company's long career, as well as high expectation that buildup surrounding major launches, such as their new OS (and their iTV) launch that will happen early January.  After all, its all about speculation.....

Nice analysis on the fundamentals, though, just wanted to give a bit of (bullish?) flavour

[ScottishTrader]

AAPL has made 2 consecutive all-time high closes the last 2 day, reaching an intraday high of 86.30, just 10 cents off the high at the beginning of the year that precipitated the massive sell-off.  Personally I think AAPL is screaming "buy me you silly fool!!!" right now, in fact it has bee for months (why do I never listen???)

Since the breakaway gap in July, it has been riding a very nice channel, and if you bought that gap up, you would be sitting on over a 40% profit right now    Makes me remember everyones short-sided discussions at the time.  I think that AAPL may have a little trouble getting over the $86 mark, but I am pretty confident we will be looking at a $100 stock by the new year.  AAPL by all expectations will produce an absolute bumper christmas season, and in addition, have mahjor announcements regarding their new OS (which they hope to steal switchers in the Vista upgrade cycle) as well as the iPhone, which looks very likely to make its debut at MacWorld San Francisco in January.  I recently read an analysts commentary saying that they expect the iPhone to add about 70c EPS to full year 07 revs, which to date has not been taken into account in most AAPL earings models.

All in all, I think I am sick of floundering in small caps and its about time to take a nice slice out of a  large cap stock like AAPL to bring home the christmas bacon.  I will be buying AAPL on any sign of weakness, I expect there to be a little pullback, possible to around $82 before it pushes through to new highs.  There is never succh thing as a no brainer but even though AAPL cmmands high premiums, this really seems like a no-brainer to me.

Good trading all.

[ScottishTrader]

AAPL closed at an all-time high yesterday, gapped up this morning and this looks like a blue sky breakout.  Not waiting for a pull-back - picked up some at 87.50 this morning.  Looking for a move to $100 by christmas 

[kayaman99]

I would expect AAPL will certainly challenge that $100 mark by Christmas with strong product demand leading up to the holiday followed by the hype that MacWorld generates.  There's also the speculation of the iPhone.

[ScottishTrader]

Strong continuation day for AAPL today, I'm liking the look of this more and more (and wondering why oh why oh WHY did I not buy AAPL 4 months ago, or even 1 month ago  )

AAPL formed an intraday ascending triangle (if you count the rogue 90.00 tick earlier in the day) that broke to the upside at the end of the day, putting a short term target of 91.13 IN PLAY.  Also worth noting is that the last 2 days action broke out of the ascending channel AAPL has been riding for the last few months - now I'm not totally sure how to measure targets from channel breakouts, but if it works like other patterns then the ttarget for this channel breakout is low of high of channel - low of channel on top of the breakout price, which gives a target of either $110 or $114, depending on which low you measure  (87-64 + 87 = 110).  Most analysts are pegging their targets just under $100, at which point I'd be willing to take a little off the table.  But if AAPL goes parabolic like it did last christmas, I think 110+ could be easily reachable before it pulls back again.

All in all, I think a lot of people have been (and maybe still are) underestimating AAPL's longer term potential, and if I could bear to hold a stock for a whole year this would have to be the one I think.  Anyway, enough blabbing, all you americans have a nice thanksgiving and get yourself down to an apple store on "black friday" to pick up some bargains!!  (Actually I may have a little turkey too - my dad's american )

[setravis]

All "7 AAPL" Threads have been Merged.
Please use the search before starting new threads on a Stock Pick.
Chances are a thread already exist.
So why not post whatever you have to comment about on that pick to that thread.
"Simplicity" My fellow traders.   
All history on a stock pick in 1 thread is awesome.   

Thank You....and good luck with all your trades....make some $$$

[ScottishTrader]

AAPL update:
Another all-time high for the stock Friday, continuation from the channel breakout. Volume was pretty solid considering it was only a half day too.  I am continuing to like the look of Apple with reports of iPod demand aoutstripping supply (especially the new shuffle), they should be in for a very strong quarter.  As a side note, American Technology Research are maintinaing their price target of $92, while Piper-Jaffray have a $99 price target. Things continue to shape up well for Apple imo.

HOLD and I'm raising my stop on AAPL to 86.20.

[ScottishTrader]

Apple shares rebound as UBS ups price target to $108

By Prince McLean
Published: 11:25 AM EST
Shares of Apple Computer rose over 2 percent to regained some of Monday's losses after UBS Investment Research issued a bullish research note in which it raised its price target on the iPod maker.

Analyst Ben Reitzes, who maintains a Buy rating on shares of Apple, increased his price target to $108 from $95, citing healthy sales of iPod digital music players during the early going of the holiday shopping season.

"Our checks point toward solid iPod sales for new shuffles & certain nanos along with momentum in Macs and prospects for higher accessories & software longer-term," he wrote in a note to clients.

Reitzes bumped his estimates on the Cupertino, Calif.-based company for the December quarter to $0.80 in earnings per shares on 11 percent revenue growth to $6.4 billion, up from $0.78 and $6.3 billion. He also increased his quarterly iPod unit sales forecast by approximately 1 million units to 16.56 million, but made no changes to his Mac model of 44 percent growth to 1.8 million units.

Looking ahead to fiscal 2007, the analyst said Apple's higher Mac sales may lead to better sales of software, which he estimates will grow 22 percent to $1.56 billion in revenue. He's modeling the company to earn $2.84 per share on 23 percent revenue growth to $23.76B, up from $2.75 and $23.25 billion.

"Also, we wouldn't be surprised to see Apple pull up the launch date of its new OSX Leopard in order to pre-empt Microsoft Vista," he told clients. "Another area that could benefit in [fiscal 2007] is sales of "other music & accessories" as Apple sells more movies (we believe Apple will sign-up more movie studios for iTunes beyond just Disney)."

Assuming Apple can maintain its Mac share gains and continue to reinvigorate the iPod line with video, gaming and WiFi-related features, Reitzes projects the company will earn $3.35 per share on 18 percent revenue growth to $28 billion in fiscal 2008.

"We continue to believe Apple will launch new products in calendar '07 including cell phones, iTV and even ultraportable devices," he wrote.

[ScottishTrader]

More upgrades:

Needham & Co. raise their target to $115, siting major predicted long term gains n PC market share
http://www.appleinsider.com/article.php?id=2273

AAPL is building a nice ascending triangl on the 30min chart from its gap breakout on the 21st.  I put the triangle target at $98.80.  Lets see if it makes the breakout in the next few trading sessions.  Keep a eye on that 93.15 resistance!!!