How can Apple be this cheap?
Just because Apple shares are trading for $250, people think the stock is expensive. Here's why it's a steal.
Yep, Apple (AAPL) is a focus of mine. Yesterday on "Morning Joe" -- my favorite talk show (I can't wait when I am booked) -- we were all playing with our iPads and the crowd was in disbelief that Apple could be so big.
To me, though, the question is how can Apple be this cheap?
We have to use Karen Cramer's old 10-to-1 rule. You need to divide this stock by 10 to think about it. Would you buy a $25 stock at a 12 multiple that has $5 in cash, no debt and is growing quickly -- perhaps by as much as 20%? How about if it only had a single-digit share in all of its key markets? How about if it had new product cycles, several of them, happening all at once?
You would say it is a steal.
But, because it is at $250, people consider it expensive. And, because it has passed Microsoft (MSFT) in size, people are skeptical.
Anyway, I have to keep hitting this stock. It remains my favorite in the Action Alerts PLUS portfolio. The only thing is, because I keep hitting it, I can't ever buy more when I want to.
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The company has made at least 4 acquisitions in the space, and few people have paid any attention.
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