Another Little Bite

By Travis Johnson, Stock Gumshoe, November 21, 2011

As the market tumbles thanks to the failure of the Super Committee and the rising level of feelings of impending doom, I picked up a few more shares of Apple this morning when they triggered a buy limit order down here in the $370 neighborhood.

I have no idea whether or not this will be a “bottom,” but the more I see from Apple’s performance and financials, the better I like the stock compared to the rest of the market. Cheap, dominant in key sectors, and continuing to grow at ridiculous rates for a mega-cap company even as they have plenty of cash on their books to invest in whatever they want to fuel the next wave of growth. If Apple was growing this quickly and wasn’t as large or well-known, it would probably be trading at 2-3X this multiple (ie, a forward PE of 25 or 30 to go with the expected 20% earnings growth, instead of the forward PE of 9 that the shares command today).

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It can be hard to picture a company growing this quickly when they’re already so large, and hard to “believe” in that growth. But it’s worth noting that when they were roughly a $250 billion company a year ago (not one of the two biggest companies in the world like they are now, but awfully close to it), they were just about to grow earnings by 25% … and if analysts are right with their 4Q estimates Apple’s earnings will jump by almost 50% over last year’s fourth quarter.

Oh, and yes, if Stock Gumshoe’s year-end financial viability supports it, I’ll probably buy at least one more Apple computer next year to support the mighty machinations of the Thinkolator … so I’m sure that’ll help them out.


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