Apple Joins 700 Club in AH, Still Cheap?

Apple (AAPL) closed at another all-time high just shy of $700.  It’s trading at $701 in after hours, however.   It’s been awhile since we’ve run our stock valuation sensitivity analysis and thought Apple’s  initiation into the 700 Club was as good a time as any to dust off the model and post the new results.

Apple’s balance sheet is currently loaded with $117 billion of cash, equivalents, and long-term securities. This amounts to $125 per share or almost 18 percent of the current stock price. Assuming the company earns $45 for fiscal 2012, which ends this month and right in line with current estimates,  the stock is trading at a cash adjusted trailing P/E of 12.8.

If earnings grow at 28 percent for fiscal 2013 to $58 per share,  in line with current estimates,  the cash adjusted forward P/E is 9.9,  which is highlighted in green in the valuation matrix. Thus, the market still doubts Apple’s ability to continue to deliver, though a little less so today after the iPhone5 blowout over the weekend.

The valuation story for Apple remains positive even after its huge run. Still lots of room for growth in China, for example, though doubts about that economy are growing.    We don’t know how high they will take the stock, but we’ve lost a ton of money trying to guess when the party will end and splitting too soon. We will for the cops to arrive and let the market tell us when it’s over.

One more thing. Mr. Bernanke just super spiked the punch bowl. We wonder what impact QE∞ will have on Apple’s multiple and if it will make equity markets “bubblicious” once again. Always with a stop loss, folks.

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