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Jan 30

AAPL Cash/Share

I’m not particularly a fan of Apple products, nor have I ever understood the willingness of consumers to pay a sizeable premium for them, but I can’t argue with Apple’s success as a company. Their annual EPS growth has been both absurdly consistent and absurdly high. Consumer sentiment might be shifting though, which of course would impact their profitability. Recently, I’ve started digging through their financial statements, to at least better understand whether I could justify some longer-term puts. Granted, I haven’t totally convinced myself on the bearish direction yet, but so far anyway it makes more sense. Between foundries demanding a larger cut, and rising Chinese wages due to the emergence of its middle class, I just don’t see how AAPL’s margins are maintainable – but again, I’ve admittedly never understood their consumer base. Nevertheless, in returning to the point of this post, it’s worth mentioning that as of their last financial statement, $145 of their ~$450 share price is accounted for solely through their immense cash reserves. Ben Graham might wait until it hits that price to move long on it (he might be waiting forever), but I’m thinking it looks interesting around $300 (I might also be waiting forever). I’ll have to wait and see if Mr. Market agrees.

AAPL January 23-24, 2013

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