Can't remember a season with so many strong tornados hitting major areas. I'm sure in every season with an abnormally high tornado count there are many strong ones but they probably hit isolated or non-populated areas. This year they are striking heavily populated areas.
Thankyou TM for your encouraging words. I'm good with my investment strategies, since I know fully the risks involved. No doubt that I am learning some good lessons here, but I am fine overall. The LFA is on its way
Tell me something. Why d'ont they build homes with partial or full basements out there.
When I lived in KC and Wichita basements were common. Both of our houses had full basements. Our house in Wichita was a ranch (very common layout there), but it had a view out basement, so the back side of the house wasn't fully protected by the ground.
I know when you get towards southern Missouri, the ground has a lot of rock, so digging a basement is probably expensive. A good friend of mine has a ranch on table rock lake near Branson, Mo. His basement was basically cut into the bedrock. He as an unfinished room in his basement which the floor isn't poured concrete, but just what's left of the blasted out rock his house sits on. So I'd think it take more than a backhoe or excavator to dig a basement there.
As for getting out of the storm room, I don't know, glad I never had to find out. We kept some provisions in there just in case (water, and other consumables), I'd much rather be trapped in there vs. being trapped under miscellaneous debris.
I would guess that private homes in Joplin do have basements. I know that 90% of homes in KC have basements, including ours.
The problem is apartments and mobile homes, etc where there is no basement. Also many small business and/or commercial bldgs. are probably built on a concrete slab. In those places you would be very vulnerable.
As far as fearing thunderstorms, etc. I really don't. But I do respect the damage they can do and use caution when necessary.
It's sort of a tiny concrete room/vault dug into the ground
I remember the bomb shelter boom of the 1950s. The grade school across the street had one built under the school when it was constructed. It would hold several hundred people. It had water and basic food stuff to last a while.
Maybe it would be a good investment for some of these places where they are rebuilding after the tornadoes. Build the basement so the house could be blown away and you would still have a safe haven with a concrete and steel roof over your head.
FWIW, I caught a part of Cramer's show last night, and I saw the interview with the head of CKSW. I like the concept behind this company, so this morning I switched my speculative stock from RIMM to CKSW. The only problem is that the stock is trading up quite a bit already, so I only bought a portion of my intended investment, and I will put more into it if/when the stock dips. I would expect there might be some traders that will take profits from yesterday's and today's gains, sending the price down a bit, and then I'll buy more.
Cold be a real winner... CKSW.
In the meantime, AAPL and IBM are going sideways, but my Sprint (S) investment keeps soaring higher. I might buy more on the next dip.
I am pleasantly surprised with my Sprint holdings as well. I should have unloaded C while I was still in the green. I was against that split and it is doing what I had feared. Hopefully it does not keep going down to oblivion.
Here's a good article comparing Salesforce.com to Apple. It puts the idiots on Wall Street into perspective. And, IMO, it really underscores the true value of AAPL... and it also re-enforces my opinion of Cramer, which is that he is smart, but I do not like his manipulative "salesmanship", putting a spin on various stocks, companies, and economic info.
Analyzing 2 Cramer Favorites: Apple vs. Salesforce by Bret Jensen
It is a truly strange market out there right now. Turbulence is starting to increase which will likely continue as withdrawal of QE2 comes closer and the problems in the European sovereign debt arena come to a head. I am amazed at how bifurcated the market has become. On one hand you have solid companies producing consistent increases in earnings, revenues and cash flow selling at low multiples. On the other hand, you have numerous story stocks that are masters at hyperbole, selling at ridiculous multiples, and in the same industry. Nothing illustrates this more to me than the difference in valuations between Apple (AAPL) and Salesforce (CRM); two Cramer favorites.
Both CRM and AAPL have grown revenues north of 30% on average annually over the past five years. They have also both grown earnings at better than an average annual rate of 60% plus over that same time period. You would expect given similar growth rates and prospects; valuations would be in the same ball park. You would be wrong. If you look at the chart below comparing Apple’s and Salesforce’s cash flow and EPS (normalized for the difference in their stock prices by multiplying CRM’s numbers by 2.29), you can see the market is placing a hugely higher multiple on CRM’s results.
This also follows through to other valuation measures. CRM sells for almost 12 times trailing revenues, Apple goes for around 3.5 sales. CRM’s PEG is 3.7, AAPL is going for a .66 PEG. AAPL has exceeded earnings estimates by a much larger amount that Salesforce over the previous four quarters. It also has over $31/share of cash per share on its books to a negligible amount for CRM. Although Apple is regarded as a very good marketing machine, it has nothing on Salesforce when it comes to spinning its results. It seems every earnings report, CRM beats by a penny or two. Their CEO then goes on Cramer or another outlet to put the best possible gloss on what are just okay results. Over the past five years, CRM has been spun as a “software as a service provider” to being in the vanguard of “Cloud Computing” to the latest spin just announced on Cramer; now Salesforce is the “Facebook” for business.
Consider that AAPL sells for around 12 times this year’s projected earnings after stripping out cash, earnings estimates have increased significantly over the past 90 days for both 2011 and 2012’s results, and it will grow revenues by over 55% this fiscal year. Salesforce is going for 115 times this year’s projected earnings, earnings estimates for 2011 have come down over the past ninety days, and it will grow revenues by less than half Apple’s projected growth rate. So which stock would you rather own?
You have said often though that the market sometomes defies logic, sometimes to an extreme level (and per the stats in that article this is one of those times) and when it does you have to go with the crowd versus the data, even though the data is overwhelming. I can't explain it. If I'm acquiring any of these companies as a CFO, there is no question that Apple stands out. It's a high level growth company of extreme high quality, trading at value prices, heck almost low value prices. Meanwhile CRM and AMZN are trading at multiples that are senseless, and their supporting Balance Sheets are much weaker yet the market keeps pouring money into them for reasons that I can't fathom. As a CFO I wouldn't even look at them even if you cut prices to a third of what they are. So it is all unexplainable for me. At least with oil you had a fundamental, the weakening dollar, that picked up a significant to substantial amount of the cause. Here you can't understand any of it.
What also amazes me is Apple is a stock that should be a safety net on a bad day. But it isn't. It's as if the institutional investor has forgotten it exists or is a relevant company. When things are this unexplainable I can only go to manipulation as the cause. Either that or analysts think Apple has peaked and earnings will decline from here.
Investors became so used to Apple's consistent string of home runs, that they almost need it in order to continue investing in Apple.... and if Apple hits a triple, they might be disappointed... IOW, the expectations are too high and investors are blinded by the level of prior success.
Also, there is always the threat of genuine competition. Apple is not immune from competition... especially from Google, Samsung, MAYBE Microsoft down the road, and even Intel (there are rumors of Intel 's serious intentions with regards to building competitive mobile products)
And, Steve Job's health WILL have some sort of impact at some point in time, of course.
But, in spite of everything... I totally believe in this company and its stock. Apple is dominating the entire mobile world, as well as making gains in the desktop arena... and I expect all of that to continue for a considerable time.
As far as "going with momentum" vs. fundamentals... I do indeed believe that investor sentiment and momentum are real factors. They ARE. I have not changed my perspective on that at all. But, when we put our money into companies, we have the important choice to decide how much we want to invest in the bubble stocks, and how much we want to invest in the real McCoys.
Sometimes the bubbles provide a better return, but the risk is greater. This time around, I am most heavily invested in Apple.
Well, take a look at this. Why did it take so long to uncover? Is there any hope manipulation can be controlled?
New YORK (CNNMoney) -- Federal regulators charged five oil speculators Tuesday with manipulating the price of crude and making a $50 million profit from the scheme.
The Commodity Futures Trading Commission alleges the speculators bought enormous amounts of actual crude oil for sale in Cushing, Okla, during the early months of 2008.
This created a perceived shortage of oil in Cushing -- a major point for oil delivery -- and drove the price of oil futures contracts higher.
The speculators then bet the price of oil would fall by selling so-called "short" contracts to other investors. When the speculators sold their actual oil holdings in Cushing en mass, the price of oil did fall, netting the group a hefty profit.
The alleged scheme took place between January and April 2008, a time when oil prices were gradually climbing toward their all-time record of $147 a barrel set in the summer of 2008.
Investors became so used to Apple's consistent string of home runs, that they almost need it in order to continue investing in Apple.... and if Apple hits a triple, they might be disappointed... IOW, the expectations are too high and investors are blinded by the level of prior success.
I understand everything you are saying here but the point would make a lot more sense if Apple was trading at 25-30X PE instead of under 16X on a gross basis or under 12X when you adjust for their cash hoard (as you should). Heck if the reaction is a big selloff on a company miss then Apple would drop so low that management could easily set up a privitization of the stock.
... the point would make a lot more sense if Apple was trading at 25-30X PE instead of under 16X on a gross basis or under 12X when you adjust for their cash hoard...
Well, Len that's the bigger point being made here... NONE of it makes sense. That's what we've been posting here for quite some time, and that's why we are all looking for answers... from market manipulation to media manipulation, and to any other reasons that might explain it. That's why I posted that article about those Friday Apple share price manipulators, and OW followed up with a little more info on the same topic. That's why I posted Bret Jensen's article today about contrasting a solid-as-a-rock company like Apple with an over-hyped bubble stock like Salesforce.
We all agree. It just doesn't make sense. Especially when we contrast Apple's numbers with some other companies whose share prices are nothing more than bubbles based upon hype and unrealistic investors' perspectives.
Like I said earlier... we all have a choice as to how we invest, and I don't mind a small percentage of speculation in my portfolio... in fact, I like to participate in a little speculation, but overall I want to see good fundamentals, and Apple sure meets that requirement very well.
IMO, no matter what the investors do in the short term, ultimately they will invest in Apple in a big way.
I think you mean the Administration probably works for Soros !
LOL!
Mr. George Soros has a highly inappropriate amount of political influence, and is directly responsible for a significant and dangerous level of media manipulation as well as manipulation of global financial markets and the global economy.
IMO, he is an extrememly powerful and dangerous individual, and I will not be disappointed when he is finally and inevitably out of the picture, and no longer a menace and threat to mankind.
Even though AAPL trades at 16X PE, I look at it as insurance. The more undervalued, the better the potential upside and I like the underdog value proposition at the moment. Just underpins it is such a great investment even at this price-point.
Hopefully, they just keep churning out market-leading products because they are the real tech leaders for consumers and they are on a HHHHUUUUGGGGEEEE roll.
Regards, OW
P.S.: The surprise is a few days away.... :surprise:
Apple isn`t doing so poorly---after all some of the powerful index people removed a certain percentage from it`s weighting in some of the etf etc, and the market as a whole sure isn`t on fire, so the correction so far is minor.... In `dollar` terms it is very highly valued, and it`s future is very dependent on future products......Now Exxon is valued in such a different way, and of course it`s value is determined by additional oil finds etc....All in all Apple is just a very fine company, and is poised for some good momentum news.....Apple`s only real flaw is they do not return anything to the stockholder, and that is the basic thing an investor should be focusing on....after all just what is the purpose of owning stock if you never were to get a tangible return? and are dependent on your timing? Tony
Yes, Apple depends on the development of successful future products. AND services, such as the successful iTunes... which, btw, is stupidly lacking the inclusion of downloadable e-books (specifically Apple's own iBooks should be part of iTunes), and leaves Amazon holding the advantage. The integration of iBooks into iTunes is a no-brainer, and I am shocked it hasn't happened yet.
Apple`s only real flaw is they do not return anything to the stockholder, and that is the basic thing an investor should be focusing on....after all just what is the purpose of owning stock if you never were to get a tangible return? and are dependent on your timing?
Yes, we demand a dividend from AAPL!! Those greedy bas--rds!
I have to disagree with you here Tony. I value certain stocks (certainly not all stocks) by their multiples and the Apple multiple has gotten lower and lower as it's earnings have grown phenomenally. Apple is certainly a stock I look at based on its multiple. The low multiple the market has placed on Apple tells me the market doesn't believe Apple can hold its current earnings level so they see a declining future. I d'ont see that but as long as the market has that perspective all that will happen is the market will adjust the next quarter earnings by the current multiple. So you'll get a bump but not what any of us think should happen to a company perforning so well. Now the one company that can really hurt Apple is Google and that's not lighting the world afire either. In fact it's multiple is also in a declining phase. So maybe the market is looking at this segment negligbly or maybe it's demanding better outlooks out of Apple and wanting to know what it will do with a cash hoard that will approach $100bln by late next year. The no-news is good news approach Apple management is taking with respect to guidance and planning is certainly not a good one for the valuation of its stock and I have to say the stock, not the company is perforning poorly.
Yeah - what a shame. Great guy. I never met him but CNBC is a client and my partner once met him on one of his storied smoke breaks when he was at their office. He said he was even more impressive in person than on the show and very friendly. The shame of it for us is he was one of the very few business anchors that shook down the Wall Street guys with rattling questions and feared no one. I'm sure up in heaven God is telling him, "Mark, we d'ont ask questions up here".
Perhaps Tony was saying Apple, THE COMPANY, isn't doing so poorly... as opposed to AAPL, THE STOCK, isn't doing so poorly... in which case you would be in total agreement with him.
Like you, I first thought he meant the stock, but after reading his post again, I am not as sure.
Anyway, you have made good points.
I think our love affair with AAPL could be clouding our perspective a little, and it bothers those of us that truly believe in the company to see investors shun the stock to this extent.
I bought more of this stock (Sprint - S) at it's session low (so far), and it continues to amaze me. Next dip, I will buy even more. I strongly suggest you all take a good look at this stock.
Also, CKSW (my speculative stock) might be worth a look.
If you don't like them, then don't buy them of course. But at least take a good look... otherwise there's no reason to post any stock tips.
I love the fact that he would ask the tough questions to guests and demanded an answer without beating around the bush. He was always looking for the truth. I love people that have this characteristic.
You better come on down here to Chas--Myrtle before it catches on fire...Man it is hot today, and I have to water the palmettos that were planted a month or so ago...
I think our possible difference is that I don`t think the market as a whole is acting so great---in fact I think it is setting up for a decline, but no `bear`...and if I were to be right then the stock is holding pretty good....If the market were to be smoking then it is acting poorly....
I notice that ibm is say fourteen times earnings and apple sixteen......and I`m not sure what apple is really------retail, high teck, development , etc....
One thing for sure is that apple is a great company....Tony
I can't look at it that way though. IBM operating profit is up 13% in 2 years on revenue that declined 4%. Apple in the same time period has seen their revenue double and their operating profit triple. Stats like that beget a much higher multiple than 16X and certainly higher than 2X over IBM. Apple has increased a lot further in the 6 months since their fiscal year end as I'm using annual P&L's. Meanwhile Amazon, with a tiny fraction of the earnings of either is significantly below Apple's growth rate, has a much weaker Balance Sheet, much higher cost of goods and trades at nearly 6X Apple's multiple. I think some of it - as what Tag showed in the article he posted yesterday - is in the outlooks, playing to the analysts and putting a nice ribbon on everything. Companies like Google and Apple say here it, is do what you want with it, and forget about us giving you a clue about the future.
As you know I have encouraged those that own Apple to hold on to a comfortable amount of it , and ride along......all I can contribute is my past knowledge of the stock market, and how it has evolved till today.....Apple is a `goliath` and is almost as highly valued as Exxxon.....someone could get hurt if something comes up we don`t anticipate....I mean after all we really haven`t seen how the world events such as Japan or even China have affected apple.....
The pricing of apple`s products are lofty, and competition is coming....As much as I enjoy my computer, and I am a loyal supporter, I at one time was amazed at the `razor ` phone...Just look what happened there.....Apple will have to continue to deliver --quarter after quarter--and hopefully a great new produce....In my case a wireless tv with all the accessories like a tivo etc :>)....Tony
Agreed, I can only imagine when Jobs is gone that the intrinsic value of Apple's future will be greatly diminished.
When he directed to design the impossible, he got it done because he knew it could be done even though others did not believe. You'd need to prove to the markets that someone with that force of creation and implementation can fill his shoes before the fundamentals Len so astutely presents can move the stock accordingly.
You'd need to prove to the markets that someone with that force of creation and implementation can fill his shoes before the fundamentals Len so astutely presents can move the stock accordingly.
There won't be any sudden "proof", because it can't exist by some sort of "show & tell". The proof will come after Jobs is gone, and then the world witnesses a series of smart business decisions, and the release of new innovative products. And that will take a bit of time.
The stock will take a hit when Steve departs, and I recommend trying to see where the bottom will settle, and then buying the heck out of it... because it will only be a matter of time until the investors realize that their emotional knee-jerk reaction wasn't smart, and that there are plenty of geniuses working at Apple... some of whom have been waiting for their chance to make a difference.
Remember, in some ways Steve is VERY stubborn, and as a result we have seen the mismanagement of certain things over time. He should have allowed Adobe Flash to work on the iPhone and iPad. He should have incorporated iBooks (the e-reader) into iTunes and therefore not only music and videos and apps would be available, but so would books. It has been stupid to give up book sales to Amazon, and Barnes & Noble, when Apple already has offered the PERFECT media delivery system with iTunes.
Steve shouldn't have poo-pooed the idea of a netbook when all along the latest MacBook Air was imminent... and then after its release it should have had mobile cellular connectivity as a standard built-in feature, as well as better SSD storage capacity, faster processor, and backlit keyboard.
The iPhone is missing the higher specifications and speed of many competitors, and there is no excuse for that, given its beautiful design. If it wasn't for its "head-start", numerous apps, and that beautiful design, the iPhone can not keep up with the competition from a hardware performance standpoint. It is slower and less capable in numerous ways.
The exclusive deal with AT&T was stupid, IMO, and the iPhone and iPad should have been available to ALL the cellular carriers.
And, what's the excuse for not having an anti-glare display on the iPad?
There were many, many earlier years that Apple wouldn't use Intel chips, and it wasn't until they did so that their desktops actually saw a good increase in sales numbers.
Lots of little things, some bigger things... and they all have added up and they point to the two sides of Steve Jobs... the genius side and the stubborn (& selfish) side. When he is replaced, I fully expect to see a whole lot of great ideas come out of the woodwork, that have been simply waiting because they were surpressed instead of encouraged by Steve.
Don't get me wrong, I absolutely admire and respect Steve Jobs as one of the most creative, innovative, brilliant individuals to walk the face of this earth... but like so many geniuses, their own personalities can be their worst enemy.
Apple is worth $400/share right now, IMO, and when the latest awesome thing is released, it should go to $450. That's when I'll sell and let it cool off.
I bought more of this stock (Sprint - S) at it's session low (so far), and it continues to amaze me.
I hope Sprint (based here in KC) does well, I have some allegiance to them, but I do have some reservations down the road. They are fighting the ATT/T-Mobile merger tooth and nail but will probably not prevail.
Size really does matter in this business. Why? Many times the larger companies get exclusives on the latest phones and the smaller companies have to wait, so eventually Sprint may be the odd man out. On the other hand, maybe someone will snap them up.
The Flash Player itself is virus free but I guess someone could write a virus that could be downloaded along with a flash file. But if you were to google Flash and Viruses you'll see little since 2002.
Apple states that they don't think Flash is a good solution because:
I would look for the Feds to protect Sprint from being gobbled up by the two behemoths of the industry. I cannot understand how AT&T stays in business with their horrible accounting. I will never use their services again. And I worked for them off and on over my 46 years in the business.
At this time Sprint leads the deployment of 4G networks with Verizon hot on their heals. It really depends on where you need to use your phone. I am betting on Sprint. Though Verizon is a formidable opponent. Personally I hate Cell phones. Only carry my Sprint phone on vacations as an emergency calling device. I am on the Sprint Pioneer plan. I only pay for any minutes I use outgoing. Last year $10 covered the whole year.
What do you folks think about COH? We've owned it for some time and have earned about a 2300% return in 8 years? It just hit another 52 week high and is still rated a strong buy. Growth has slowed vis a vis it's history but it now pays dividends. Exposure is high to Japan.
I'm at the point that we cash in and be happy. My wife has an emotional attachment. It's in an IRA so tax issues won't hit us for many years.
Speaking of $450 a share, here is a little article this morning:
Apple ests and target raised to $450 at WedbushFont size: A | A | A 9:47 AM ET 5/25/11 | Briefing.com . Wedbush raises its AAPL tgt to $450 from $445 as it would be buyers of Apple given continued product momentum and attractive valuation. While upside expectations are becoming rightfully subdued and timing of the iPhone 5 launch is still likely six months away with only an incremental interim upgrade, firm believes Apple still has enough horsepower to drive continued revenue growth and upside to ests. Based upon its checks and public comments by VZ and others, it's in the camp that expects only an incremental iPhone upgrade (iPhone 4S) this Sept, which includes a dual-core processor and improved imaging. It expects the iPhone 5 to arrive by next January, which will include 4G and can work on both VZ and T's networks, thus allowing CDMA and GSM based subs equal access to the new iPhone. Firm is increasing iPad ests on robust demand, though tempered by supply constraints.
They have a significant product announcement with Motorola coming up VERY soon... likely on June 9th... possibly a very cool device incorporating Tegra 2.
They have some VERY powerful smart phones, AND their service is excellent. I personally use their service and it is by far the best I've ever used. I had AT&T for years (with iPhones) and my daughter had Verizon for a while. Sprint blows them out of the water with their unlimited plan, mobile hotspot wi-fi, mobile tv, nearly zero dropped calls, and superior quality. I love the HTC EVO 4G... its camera and video capabilities as well as its raw processing speed and power totally puts the iPhone to shame.
BUT..... if Sprint gets the next generation iPhone, I will still consider it because I want to change my family's entire computing experience over to Mac, and having an iPhone will make it easier to sync all the data between devices.
Sprint stock could be $7.50-$8+ before all too long... and that's a 30+% increase. I actually bought more again today at the dip.
I don't think the AT&T/T-Mobile arrangement will actually hurt Sprint, even thought they are fighting it... they have their own specific reasons for that, but I really think they will be fine, and that whole possible merger got factored into the share price quite a ways back anyway, when it was first announced.
Nothing is guaranteed in the stock market, but I really like Sprint at this time, considering all the positive reasons and the potential.
Comments
The LFA is on its way
When I lived in KC and Wichita basements were common. Both of our houses had full basements. Our house in Wichita was a ranch (very common layout there), but it had a view out basement, so the back side of the house wasn't fully protected by the ground.
I know when you get towards southern Missouri, the ground has a lot of rock, so digging a basement is probably expensive. A good friend of mine has a ranch on table rock lake near Branson, Mo. His basement was basically cut into the bedrock. He as an unfinished room in his basement which the floor isn't poured concrete, but just what's left of the blasted out rock his house sits on. So I'd think it take more than a backhoe or excavator to dig a basement there.
As for getting out of the storm room, I don't know, glad I never had to find out. We kept some provisions in there just in case (water, and other consumables), I'd much rather be trapped in there vs. being trapped under miscellaneous debris.
The Universe is telling us a thing or 2.
Regards,
OW
The problem is apartments and mobile homes, etc where there is no basement. Also many small business and/or commercial bldgs. are probably built on a concrete slab. In those places you would be very vulnerable.
As far as fearing thunderstorms, etc. I really don't. But I do respect the damage they can do and use caution when necessary.
2013 LX 570 2016 LS 460
LOL, in that case I guess the rest of the family would just have to take their chances !!
2013 LX 570 2016 LS 460
I remember the bomb shelter boom of the 1950s. The grade school across the street had one built under the school when it was constructed. It would hold several hundred people. It had water and basic food stuff to last a while.
Maybe it would be a good investment for some of these places where they are rebuilding after the tornadoes. Build the basement so the house could be blown away and you would still have a safe haven with a concrete and steel roof over your head.
Cold be a real winner... CKSW.
In the meantime, AAPL and IBM are going sideways, but my Sprint (S) investment keeps soaring higher. I might buy more on the next dip.
TM
That said, I think C is near its final bottom, and by the end of the year, it will be higher.
So, all you need to do is wait... unless it is utlizing money that could be put to better use, and it prevents you from doing so.
As you may recall, I sold all my C shares shortly after that stupid reverse split.
And... I'm glad you own Sprint, because Sprint is sprinting nicely... GO SPRINT!!
TM
Analyzing 2 Cramer Favorites: Apple vs. Salesforce by Bret Jensen
It is a truly strange market out there right now. Turbulence is starting to increase which will likely continue as withdrawal of QE2 comes closer and the problems in the European sovereign debt arena come to a head. I am amazed at how bifurcated the market has become. On one hand you have solid companies producing consistent increases in earnings, revenues and cash flow selling at low multiples. On the other hand, you have numerous story stocks that are masters at hyperbole, selling at ridiculous multiples, and in the same industry. Nothing illustrates this more to me than the difference in valuations between Apple (AAPL) and Salesforce (CRM); two Cramer favorites.
Both CRM and AAPL have grown revenues north of 30% on average annually over the past five years. They have also both grown earnings at better than an average annual rate of 60% plus over that same time period. You would expect given similar growth rates and prospects; valuations would be in the same ball park. You would be wrong. If you look at the chart below comparing Apple’s and Salesforce’s cash flow and EPS (normalized for the difference in their stock prices by multiplying CRM’s numbers by 2.29), you can see the market is placing a hugely higher multiple on CRM’s results.
This also follows through to other valuation measures. CRM sells for almost 12 times trailing revenues, Apple goes for around 3.5 sales. CRM’s PEG is 3.7, AAPL is going for a .66 PEG. AAPL has exceeded earnings estimates by a much larger amount that Salesforce over the previous four quarters. It also has over $31/share of cash per share on its books to a negligible amount for CRM. Although Apple is regarded as a very good marketing machine, it has nothing on Salesforce when it comes to spinning its results. It seems every earnings report, CRM beats by a penny or two. Their CEO then goes on Cramer or another outlet to put the best possible gloss on what are just okay results. Over the past five years, CRM has been spun as a “software as a service provider” to being in the vanguard of “Cloud Computing” to the latest spin just announced on Cramer; now Salesforce is the “Facebook” for business.
Consider that AAPL sells for around 12 times this year’s projected earnings after stripping out cash, earnings estimates have increased significantly over the past 90 days for both 2011 and 2012’s results, and it will grow revenues by over 55% this fiscal year. Salesforce is going for 115 times this year’s projected earnings, earnings estimates for 2011 have come down over the past ninety days, and it will grow revenues by less than half Apple’s projected growth rate. So which stock would you rather own?
Disclosure: I [Bret Jensen] am long AAPL.
BTW... I bought more shares of AAPL again today.
TM
After Citi announced the reverse split, I sold at $4.43... (I think I even opined on that subject, here)..
And, with the proceeds, I bought PG at $61.50 (currently over $67)
So, even a blind pig can find an acorn, occasionally..
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You have said often though that the market sometomes defies logic, sometimes to an extreme level (and per the stats in that article this is one of those times) and when it does you have to go with the crowd versus the data, even though the data is overwhelming. I can't explain it. If I'm acquiring any of these companies as a CFO, there is no question that Apple stands out. It's a high level growth company of extreme high quality, trading at value prices, heck almost low value prices. Meanwhile CRM and AMZN are trading at multiples that are senseless, and their supporting Balance Sheets are much weaker yet the market keeps pouring money into them for reasons that I can't fathom. As a CFO I wouldn't even look at them even if you cut prices to a third of what they are. So it is all unexplainable for me. At least with oil you had a fundamental, the weakening dollar, that picked up a significant to substantial amount of the cause. Here you can't understand any of it.
What also amazes me is Apple is a stock that should be a safety net on a bad day. But it isn't. It's as if the institutional investor has forgotten it exists or is a relevant company. When things are this unexplainable I can only go to manipulation as the cause. Either that or analysts think Apple has peaked and earnings will decline from here.
Investors became so used to Apple's consistent string of home runs, that they almost need it in order to continue investing in Apple.... and if Apple hits a triple, they might be disappointed... IOW, the expectations are too high and investors are blinded by the level of prior success.
Also, there is always the threat of genuine competition. Apple is not immune from competition... especially from Google, Samsung, MAYBE Microsoft down the road, and even Intel (there are rumors of Intel 's serious intentions with regards to building competitive mobile products)
And, Steve Job's health WILL have some sort of impact at some point in time, of course.
But, in spite of everything... I totally believe in this company and its stock. Apple is dominating the entire mobile world, as well as making gains in the desktop arena... and I expect all of that to continue for a considerable time.
As far as "going with momentum" vs. fundamentals... I do indeed believe that investor sentiment and momentum are real factors. They ARE. I have not changed my perspective on that at all. But, when we put our money into companies, we have the important choice to decide how much we want to invest in the bubble stocks, and how much we want to invest in the real McCoys.
Sometimes the bubbles provide a better return, but the risk is greater. This time around, I am most heavily invested in Apple.
TM
New YORK (CNNMoney) -- Federal regulators charged five oil speculators Tuesday with manipulating the price of crude and making a $50 million profit from the scheme.
The Commodity Futures Trading Commission alleges the speculators bought enormous amounts of actual crude oil for sale in Cushing, Okla, during the early months of 2008.
This created a perceived shortage of oil in Cushing -- a major point for oil delivery -- and drove the price of oil futures contracts higher.
The speculators then bet the price of oil would fall by selling so-called "short" contracts to other investors. When the speculators sold their actual oil holdings in Cushing en mass, the price of oil did fall, netting the group a hefty profit.
The alleged scheme took place between January and April 2008, a time when oil prices were gradually climbing toward their all-time record of $147 a barrel set in the summer of 2008.
Oil speculators charged with price manipulation
Regards,
OW
I love it when those a--hole market manipulators are exposed. Hope they get fried.
TM
I understand everything you are saying here but the point would make a lot more sense if Apple was trading at 25-30X PE instead of under 16X on a gross basis or under 12X when you adjust for their cash hoard (as you should). Heck if the reaction is a big selloff on a company miss then Apple would drop so low that management could easily set up a privitization of the stock.
TM
2013 LX 570 2016 LS 460
Well, Len that's the bigger point being made here... NONE of it makes sense. That's what we've been posting here for quite some time, and that's why we are all looking for answers... from market manipulation to media manipulation, and to any other reasons that might explain it. That's why I posted that article about those Friday Apple share price manipulators, and OW followed up with a little more info on the same topic. That's why I posted Bret Jensen's article today about contrasting a solid-as-a-rock company like Apple with an over-hyped bubble stock like Salesforce.
We all agree. It just doesn't make sense. Especially when we contrast Apple's numbers with some other companies whose share prices are nothing more than bubbles based upon hype and unrealistic investors' perspectives.
Like I said earlier... we all have a choice as to how we invest, and I don't mind a small percentage of speculation in my portfolio... in fact, I like to participate in a little speculation, but overall I want to see good fundamentals, and Apple sure meets that requirement very well.
IMO, no matter what the investors do in the short term, ultimately they will invest in Apple in a big way.
TM
LOL!
Mr. George Soros has a highly inappropriate amount of political influence, and is directly responsible for a significant and dangerous level of media manipulation as well as manipulation of global financial markets and the global economy.
IMO, he is an extrememly powerful and dangerous individual, and I will not be disappointed when he is finally and inevitably out of the picture, and no longer a menace and threat to mankind.
TM
Hopefully, they just keep churning out market-leading products because they are the real tech leaders for consumers and they are on a HHHHUUUUGGGGEEEE roll.
Regards,
OW
P.S.: The surprise is a few days away.... :surprise:
Hmmm, think natural causes and.............soon.
In `dollar` terms it is very highly valued, and it`s future is very dependent on future products......Now Exxon is valued in such a different way, and of course it`s value is determined by additional oil finds etc....All in all Apple is just a very fine company, and is poised for some good momentum news.....Apple`s only real flaw is they do not return anything to the stockholder, and that is the basic thing an investor should be focusing on....after all just what is the purpose of owning stock if you never were to get a tangible return? and are dependent on your timing? Tony
Yes, Apple depends on the development of successful future products. AND services, such as the successful iTunes... which, btw, is stupidly lacking the inclusion of downloadable e-books (specifically Apple's own iBooks should be part of iTunes), and leaves Amazon holding the advantage. The integration of iBooks into iTunes is a no-brainer, and I am shocked it hasn't happened yet.
Apple`s only real flaw is they do not return anything to the stockholder, and that is the basic thing an investor should be focusing on....after all just what is the purpose of owning stock if you never were to get a tangible return? and are dependent on your timing?
Yes, we demand a dividend from AAPL!! Those greedy bas--rds!
TM
The bigger-than-life character host of CNBC's Squawk on the Street has passed away.
The icon will be missed by millions around the world... myself included.
TM
I have to disagree with you here Tony. I value certain stocks (certainly not all stocks) by their multiples and the Apple multiple has gotten lower and lower as it's earnings have grown phenomenally. Apple is certainly a stock I look at based on its multiple. The low multiple the market has placed on Apple tells me the market doesn't believe Apple can hold its current earnings level so they see a declining future. I d'ont see that but as long as the market has that perspective all that will happen is the market will adjust the next quarter earnings by the current multiple. So you'll get a bump but not what any of us think should happen to a company perforning so well. Now the one company that can really hurt Apple is Google and that's not lighting the world afire either. In fact it's multiple is also in a declining phase. So maybe the market is looking at this segment negligbly or maybe it's demanding better outlooks out of Apple and wanting to know what it will do with a cash hoard that will approach $100bln by late next year. The no-news is good news approach Apple management is taking with respect to guidance and planning is certainly not a good one for the valuation of its stock and I have to say the stock, not the company is perforning poorly.
Perhaps Tony was saying Apple, THE COMPANY, isn't doing so poorly... as opposed to AAPL, THE STOCK, isn't doing so poorly... in which case you would be in total agreement with him.
Like you, I first thought he meant the stock, but after reading his post again, I am not as sure.
Anyway, you have made good points.
I think our love affair with AAPL could be clouding our perspective a little, and it bothers those of us that truly believe in the company to see investors shun the stock to this extent.
TM
I bought more of this stock (Sprint - S) at it's session low (so far), and it continues to amaze me. Next dip, I will buy even more. I strongly suggest you all take a good look at this stock.
Also, CKSW (my speculative stock) might be worth a look.
If you don't like them, then don't buy them of course. But at least take a good look... otherwise there's no reason to post any stock tips.
IMO, Sprint is going to have its time, finally.
TM
You better come on down here to Chas--Myrtle before it catches on fire...Man it is hot today, and I have to water the palmettos that were planted a month or so ago...
I think our possible difference is that I don`t think the market as a whole is acting so great---in fact I think it is setting up for a decline, but no `bear`...and if I were to be right then the stock is holding pretty good....If the market were to be smoking then it is acting poorly....
I notice that ibm is say fourteen times earnings and apple sixteen......and I`m not sure what apple is really------retail, high teck, development , etc....
One thing for sure is that apple is a great company....Tony
I can't look at it that way though. IBM operating profit is up 13% in 2 years on revenue that declined 4%. Apple in the same time period has seen their revenue double and their operating profit triple. Stats like that beget a much higher multiple than 16X and certainly higher than 2X over IBM. Apple has increased a lot further in the 6 months since their fiscal year end as I'm using annual P&L's. Meanwhile Amazon, with a tiny fraction of the earnings of either is significantly below Apple's growth rate, has a much weaker Balance Sheet, much higher cost of goods and trades at nearly 6X Apple's multiple. I think some of it - as what Tag showed in the article he posted yesterday - is in the outlooks, playing to the analysts and putting a nice ribbon on everything. Companies like Google and Apple say here it, is do what you want with it, and forget about us giving you a clue about the future.
The pricing of apple`s products are lofty, and competition is coming....As much as I enjoy my computer, and I am a loyal supporter, I at one time was amazed at the `razor ` phone...Just look what happened there.....Apple will have to continue to deliver --quarter after quarter--and hopefully a great new produce....In my case a wireless tv with all the accessories like a tivo etc :>)....Tony
When he directed to design the impossible, he got it done because he knew it could be done even though others did not believe. You'd need to prove to the markets that someone with that force of creation and implementation can fill his shoes before the fundamentals Len so astutely presents can move the stock accordingly.
Regards,
OW
There won't be any sudden "proof", because it can't exist by some sort of "show & tell". The proof will come after Jobs is gone, and then the world witnesses a series of smart business decisions, and the release of new innovative products. And that will take a bit of time.
The stock will take a hit when Steve departs, and I recommend trying to see where the bottom will settle, and then buying the heck out of it... because it will only be a matter of time until the investors realize that their emotional knee-jerk reaction wasn't smart, and that there are plenty of geniuses working at Apple... some of whom have been waiting for their chance to make a difference.
Remember, in some ways Steve is VERY stubborn, and as a result we have seen the mismanagement of certain things over time. He should have allowed Adobe Flash to work on the iPhone and iPad. He should have incorporated iBooks (the e-reader) into iTunes and therefore not only music and videos and apps would be available, but so would books. It has been stupid to give up book sales to Amazon, and Barnes & Noble, when Apple already has offered the PERFECT media delivery system with iTunes.
Steve shouldn't have poo-pooed the idea of a netbook when all along the latest MacBook Air was imminent... and then after its release it should have had mobile cellular connectivity as a standard built-in feature, as well as better SSD storage capacity, faster processor, and backlit keyboard.
The iPhone is missing the higher specifications and speed of many competitors, and there is no excuse for that, given its beautiful design. If it wasn't for its "head-start", numerous apps, and that beautiful design, the iPhone can not keep up with the competition from a hardware performance standpoint. It is slower and less capable in numerous ways.
The exclusive deal with AT&T was stupid, IMO, and the iPhone and iPad should have been available to ALL the cellular carriers.
And, what's the excuse for not having an anti-glare display on the iPad?
There were many, many earlier years that Apple wouldn't use Intel chips, and it wasn't until they did so that their desktops actually saw a good increase in sales numbers.
Lots of little things, some bigger things... and they all have added up and they point to the two sides of Steve Jobs... the genius side and the stubborn (& selfish) side. When he is replaced, I fully expect to see a whole lot of great ideas come out of the woodwork, that have been simply waiting because they were surpressed instead of encouraged by Steve.
Don't get me wrong, I absolutely admire and respect Steve Jobs as one of the most creative, innovative, brilliant individuals to walk the face of this earth... but like so many geniuses, their own personalities can be their worst enemy.
Apple is worth $400/share right now, IMO, and when the latest awesome thing is released, it should go to $450. That's when I'll sell and let it cool off.
TM
I hope Sprint (based here in KC) does well, I have some allegiance to them, but I do have some reservations down the road. They are fighting the ATT/T-Mobile merger tooth and nail but will probably not prevail.
Size really does matter in this business. Why? Many times the larger companies get exclusives on the latest phones and the smaller companies have to wait, so eventually Sprint may be the odd man out. On the other hand, maybe someone will snap them up.
2013 LX 570 2016 LS 460
Apple states that they don't think Flash is a good solution because:
http://www.disinfo.com/2010/04/why-apple-hates-flash/
IMHO, Jobs doesn't like Flash because Apple can't make any money off of it.
At this time Sprint leads the deployment of 4G networks with Verizon hot on their heals. It really depends on where you need to use your phone. I am betting on Sprint. Though Verizon is a formidable opponent. Personally I hate Cell phones. Only carry my Sprint phone on vacations as an emergency calling device. I am on the Sprint Pioneer plan. I only pay for any minutes I use outgoing. Last year $10 covered the whole year.
I'm at the point that we cash in and be happy. My wife has an emotional attachment. It's in an IRA so tax issues won't hit us for many years.
Apple ests and target raised to $450 at WedbushFont size: A | A | A
9:47 AM ET 5/25/11 | Briefing.com
. Wedbush raises its AAPL tgt to $450 from $445 as it would be buyers of Apple given continued product momentum and attractive valuation. While upside expectations are becoming rightfully subdued and timing of the iPhone 5 launch is still likely six months away with only an incremental interim upgrade, firm believes Apple still has enough horsepower to drive continued revenue growth and upside to ests. Based upon its checks and public comments by VZ and others, it's in the camp that expects only an incremental iPhone upgrade (iPhone 4S) this Sept, which includes a dual-core processor and improved imaging. It expects the iPhone 5 to arrive by next January, which will include 4G and can work on both VZ and T's networks, thus allowing CDMA and GSM based subs equal access to the new iPhone. Firm is increasing iPad ests on robust demand, though tempered by supply constraints.
They might get the iPhone at year's end.
They have a significant product announcement with Motorola coming up VERY soon... likely on June 9th... possibly a very cool device incorporating Tegra 2.
They have some VERY powerful smart phones, AND their service is excellent. I personally use their service and it is by far the best I've ever used. I had AT&T for years (with iPhones) and my daughter had Verizon for a while. Sprint blows them out of the water with their unlimited plan, mobile hotspot wi-fi, mobile tv, nearly zero dropped calls, and superior quality. I love the HTC EVO 4G... its camera and video capabilities as well as its raw processing speed and power totally puts the iPhone to shame.
BUT..... if Sprint gets the next generation iPhone, I will still consider it because I want to change my family's entire computing experience over to Mac, and having an iPhone will make it easier to sync all the data between devices.
Sprint stock could be $7.50-$8+ before all too long... and that's a 30+% increase. I actually bought more again today at the dip.
I don't think the AT&T/T-Mobile arrangement will actually hurt Sprint, even thought they are fighting it... they have their own specific reasons for that, but I really think they will be fine, and that whole possible merger got factored into the share price quite a ways back anyway, when it was first announced.
Nothing is guaranteed in the stock market, but I really like Sprint at this time, considering all the positive reasons and the potential.
TM
TM