Let’s Look at Apple at $600

Apple (AAPL) reported earnings last month that really impressed investors. The stock bolted higher and yesterday surpassed $600 for the first time since late 2012.

I sold AAPL from the Growth Portfolio many months ago because I don’t think its a growth stock anymore. 2014 sales are currently expected to rise only 6% and Apple doesn’t really have anything new to give consumers. Apple’s television set and the watch never came to market. I don’t even like the iPhone, and feel HTC’s One is superior.

Still, AAPL is on my radar. So let’s see what the stock looks like now.

One Year Chart

AAPL_2014_Q2This data was compiled on April 30th when AAPL was $592 a share. What’s nice is the +15% profit growth posted last quarter, beating the +1% estimate. The problem is profits in the year-ago period were down 18%, so it was an easy number to beat. Still, at least AAPL beat it — by a resounding $1.45.

Estimates also look solid, with +14% and +13% growth expected the next two quarters. At 13 times earnings the stock is reasonable.

Fair Value

AAPL_2014_Q2_FVI used to feel AAPL should get a high P/E. At least 20. But the market never gave AAPL that good of a valuation. From 2011 to 2013 the median annual P/E was 12 to 14.

I put AAPL’s Fair Value P/E at 13. It’s 13 right now. Sure the stock can go higher, but I don’t think this is a growth story.

Sharek’s Take

Apple’s had a nice rise, but the stock seems to be fairly valued here and even if it had upside, sales aren’t growing fast enough for this to be a good growth stock. I’ll pass on AAPL here and let the stock run.

View the Earnings Table here.
View the Profit History here.
View the Ten Year Chart here.

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