Moving goalposts again. You said that they were "insanely undervalued" if they could achieve $43 and increase earnings going forward. They haven't grown from that level - it hasn't been a year. I think you understand the point... if Apple's earnings are still growing and *keep growing*, they were indeed "insanely undervalued" at $520, let alone lower prices. I'm not talking about small blips... I'm talking about year over year profit growth, year in and year out. We can't say whether it has stalled from 2013 levels because 2014 isn't nearly over.
The rest of your post keeps using the word "substantial" profit growth. That isnt needed, and never has been at these valuations. Stable earnings from the current product lineup allows new products with smaller TAM's to produce at least some earnings growth. Couple that with share buybacks and the stock will do well. Share buybacks don't inherently add value - they are leverage. That aside, you're correct that slow growth - as long as it isn't coupled with periodic contraction - would justify these price levels. Of course, that can't just happen for a couple of years, but if it happens for several years, then it would hold true. If I knew that Apple would make $50, then $53, then $56, $59, $62, I'd be a buyer, despite the single-digit growth. My take is that we're at the peak earnings on a year over year basis (once we see what 2014 does).... but if the earnings grow, then grow the year after, then clearly my thesis was wrong on a longer-term basis. |
