<<I think another thing weighing on Apple's share price is the high price of an individual share. I think the share price gives a false impression that the shares are priced to perfection where in my estimation they are undervalued on a fundamental basis>>
IMO Apple is pretty much priced to perfection, based not on its share price but on its enterprise value.
I believe that Apple's value is the second highest in the world, second only to Exxon Mobil. On its face, this is ridiculous.
Exxon generates $70 billion EBITDA per year. And because Exxon supplies a necessity product, its EBITDA should be pretty stable.
Apple generates half of Exxon's EBITDA and its cash flows aren't nearly as stable. The tech industry changes very rapidly (wasn't Apple near extinction just 10 years ago?), and Apple is being chased by very aggressive, well-capitalized competitors (Google, Microsoft, etc.). On top of this, Steve Jobs--the Thomas Edison of our generation--is gone.
At this point, I'm curious what you think Apple's upside is? $600 per share? To argue this is to argue that Apple should be the world's most valuable company by a very wide margin. I just don't see it.
To be clear, I'm not saying that Apple's stock will crash. I just doubt that Apple will significantly outperform the market over the next few years, and I've sold calls with a $600 strike. |
