Apple again

[kv968]

Ahhhhh... and with the prospect of higher returns comes higher risk.
Remember, cheap stocks are cheap for a reason. ;-)

Disclosure: long AAPL big time and know 0% abOut alcatel lucent. Good luck!

Not to compare Apple to Alcatel by any means but just remember, a stock with a low price doesn't necessarily mean it's a "cheap" stock. As a matter of fact, as far as some of the numbers go (PE, P/S, PEG), Alcatel has about the same if not better numbers than Apple.

Again, I'm not saying Alcatel is in Apple's league, but don't judge a stock totally by it's price. And it goes both ways too. Using the same train of though, Apple's price would indicate that it's an "expensive" stock which it really isn't.

[ea1776]

your Apple was $7 not very long ago...

So was AOL, XM Radio, Netscape, Gateway...

[ea1776]

Not to compare Apple to Alcatel by any means but just remember, a stock with a low price doesn't necessarily mean it's a "cheap" stock. As a matter of fact, as far as some of the numbers go (PE, P/S, PEG), Alcatel has about the same if not better numbers than Apple.

Again, I'm not saying Alcatel is in Apple's league, but don't judge a stock totally by it's price. And it goes both ways too. Using the same train of though, Apple's price would indicate that it's an "expensive" stock which it really isn't.

Oh, I wasn't saying it was "cheap" because of the price. It has a PE of 4.27. AAPL's PE is 15.52. I wouldn't exactly call a factor of 3 "the same" numbers as Apple.

The boogie man for ALU is in their debt. Their outstanding debts are higher than their market cap and almost as high as 1 year's profit. Apple has no debt. Maybe that's why ALU is so "cheap". I wouldn't even mention those 2 in the same sentence. :-)

[LMA]

So I got cought up in Apple fever today and we bought another 10 shares, bringing our total AAPL holdings to 40 shares. Stock options are too risky at this point, but as far as stock goes, I think close to 600 by the end of the year is not unreasonable.

I followed the ipad 3 announcement, and it looks like a thing of beauty. I ordered one - and DH will get my current ipad 2.

I am not sure I understand the rationale here...you bought both the stock and the ipad at the highest price possible. Why?

How is the announcement of a new gadget signify a good opportunity to buy the stock?

[kv968]

Oh, I wasn't saying it was "cheap" because of the price. It has a PE of 4.27. AAPL's PE is 15.52. I wouldn't exactly call a factor of 3 "the same" numbers as Apple.

The boogie man for ALU is in their debt. Their outstanding debts are higher than their market cap and almost as high as 1 year's profit. Apple has no debt. Maybe that's why ALU is so "cheap". I wouldn't even mention those 2 in the same sentence. :-)

The PE of the two isn't "the same" but their PEG ratio is similar depending on whose info you use.

ALU does have some high debt. The funny thing is their cash almost equals their market cap also. As I see it, their main problem with the debt is their "pensions and other benefits" which currently makes up 29% of their total liabilities and rising. And probably not an easy fix if it can be at all.

I'm not making the case for ALU, I was just merely using it since KTP brought it up. Although I will be keeping an eye on it myself as a possible trade All I wanted to point out was the fact that the PRICE of a stock doesn't dictate whether it's "expensive" or "cheap". I've just heard too many times people say, "Oh, I'm going to buy that $3 stock because it's cheap" or "I wouldn't invest in that one since it's too expensive at $150". Granted they may want to buy the $3 one if they don't have much money to invest but a cheap price doesn't mean a cheap valuation as an expensive price doesn't mean a stock is overpriced.

And I did shutter to put AAPL and ALU in the same sentence

[kv968]

your Apple was $7 not very long ago...

So was AOL, XM Radio, Netscape, Gateway...

Yahoo's been $108 (not split adjusted), now $14(-86%)
GE's been $50, now $19.04 (-62%)
GM's been $93, $0 after bankruptcy (-100%)
Enron was $90, now $0 (-100%)
Ford's been $32, now $13 (-59%)
Netflix was almost $300 8 months ago, now $109 (-63%)
Green Mountain Coffee was $105 7 months ago, now $53 (-50%)
Diamond Foods was $87 6 months ago, now $24 (-72%)

Not being a pessimist nor knocking Apple by any means, but there's a reason you don't put all your eggs in one basket. And keep track of what you are holding.

[thekid]

Not being a pessimist nor knocking Apple by any means, but there's a reason you don't put all your eggs in one basket. And keep track of what you are holding.

This is my sentiment too. Apple looks interesting, but it's already the company with the highest market cap in the US (thus you get significant exposure through indexing). I can understand somebody wanted to further overweight Appel some, but it has to be part of a long term strategy that includes some stock picking, not speculating. It's pretty basic, but it's hard to avoid getting caught up in recent good performers and doing so can be quite dangerous. There is a reason that well diversified portfolios that rebalance overwhelmingly do better.

[Nika]

We are not really speculating with this stock. We are going to hold for a while, based on our projections that Apple will be able to grow about 20% a year in the near future.

They have NO DEBT and a tonn of cash (which cannot be said for any of the companies on KV968's list. That adds a large degree of safety.

And they are a very unique company in the way they calculate their profit and how transparent they are. Most other companies, you can look at the reports, but the way they structure and calculate, it is often impossible for a professional to tell how much money they really made, let alone for someone who does not have weeks of full time research to spend on it.

[kv968]

We are not really speculating with this stock. We are going to hold for a while, based on our projections that Apple will be able to grow about 20% a year in the near future.

They have NO DEBT and a tonn of cash (which cannot be said for any of the companies on KV968's list. That adds a large degree of safety.

And they are a very unique company in the way they calculate their profit and how transparent they are. Most other companies, you can look at the reports, but the way they structure and calculate, it is often impossible for a professional to tell how much money they really made, let alone for someone who does not have weeks of full time research to spend on it.

Once again, I'm not knocking Apple nor am I comparing them to the companies I've described even though it may seem that way. They are quite a unique company, have done very well and probably will continue to do so in the future. All I'm trying to say is "don't put all your eggs in one basket" and more importantly, don't fall in love with a stock. I know you might not think you are, and maybe you're not, but I've done it in the past and have gotten burned. If some things start to go wrong and the stock starts falling don't be scared to sell it at some point. If it bounces back, so be it. At least you won't be 20%+ down and reminiscing about the days when it was $500+ and how "it'll get back there". And I'm not saying that'll be the case but just be careful.

[bjl584]

I get where kv968 is coming from. I wouldn't plow tens of thousands of dollars into Apple unless tens of thousands of dollars represented only a small fraction of my overall net worth. If I was worth $2 million, then buying $25K worth of Apple doesn't matter. But, if I am worth $100K, then $25K of Apple represents 25% of my net worth. That is dangerous.

I am not worth $2 million. I do however have more than $25K invested. But, it is spread around so to speak in various individual stocks and funds. Most of them pay a decent dividend and have good growth potential according to the numbers. I feel much safer having my money invested that way than I would than by tying it all up in a single company.

It's all relative. If you have a lot of money, then the Apple that you do own isn't an issue. If however it represents a good chunk of your total net worth, then you may want to rethink your investment strategy no matter how much you believe in Apple.

[Nika]

Wow, we are now up $9,500 on AAPL.

I've been looking at the stock market in disbelief lately.

[ea1776]

it'll be interesting to listen to webcast 9am EST regarding what they are going to do with the CASH PILE.
Apple - Apple Events - Apple Conference Call March 2012

[Nika]

Henrywilliams, I know Apple is the best, we have a lot of their product and know that nothing else compares. However, stocks do not always behave in direct proportion to the facts.

ea1776, the dividents won't dip into the cash pile, I believe they can do 10 billion a year from current profits. The buyback will dip into the pile. I wonder why they are buying back? Is there a split being planned?

I'm not sure how I feel about dividents. On one hand, yeah, it is $424 extra per year, (will pay for one unlimited data plan plus an ipad case ) On the other hand, I worry that they are stepping away from Steve Jobs vision, because he would not have done it.

[ea1776]

Henrywilliams, I know Apple is the best, we have a lot of their product and know that nothing else compares. However, stocks do not always behave in direct proportion to the facts.

In this case, not only are the products the best, so is the balance sheet.

ea1776, the dividents won't dip into the cash pile, I believe they can do 10 billion a year from current profits. The buyback will dip into the pile. I wonder why they are buying back? Is there a split being planned?

Yes, the cash pile shouldn't be impacted for now, especially with a very low expense ratio of about 25%. This is a screaming buy for any dividend growth investor. They have a LOT of room to grow the dividend over time and I suspect they will. The buy back is to help compensate for the dilution of shares due to employee compensation. Tim Cook has mentioned a couple times already that they have no plans for a split, given the research that splits typically don't do anything to help the stock.

I'm not sure how I feel about dividents. On one hand, yeah, it is $424 extra per year, (will pay for one unlimited data plan plus an ipad case ) On the other hand, I worry that they are stepping away from Steve Jobs vision, because he would not have done it.

Before Steve Jobs passed away he told the executive team to always do what they thought was right, not what they thought he would have wanted them to do. Tim Cook is doing what he knows is right. They have an astronomical amount of cash, too much to be able to invest. It would be a bigger violation of Apple's culture to go around buying corporations just because they can. Returning excess cash to share-holders is the right move, and it opens up the stock to a new group of investors (dividend only investors, which is a HUGE group!).

[bjl584]

I see AAPL is off about 3% today trading around $588 a share. It's been down as of late.