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Thursday, November 15, 2012

its official - AAPL the cheapest

How things change in 8 weeks. Eight straight weeks of decline has allowed AAPL to become the cheapest, literally, amongst other large tech stock.

Here is a quick look:

PE - 14.41
Forward PE - 8.23
Cash (net debt) ~ $54B (~$6/share)

Microsoft is obviously heavily dependent on the PC, making its prospects suck. Ballmer is kind of a crappy CEO, confusing the act of copying competitors (in search and mobile) and calling it 'innovative', thereby bastardizing the word.  Forward PE is also suspect due to the low expectations of Windows 8 adoption and rapidly declining PC sales.

PE - 13.36
Forward PE - 11.17

They are positioned in the heart of the next phase of technology utilizing big data. The cash position is irrelevant with IBM because of their continuous re-purchases and dividend. They have a good balance of healthy financial engineering.

PE - 8.74
Forward PE - 10.17
Cash (net debt) ~ $3B

They are in a rapidly declining sector, and not moving fast enough in mobile.

PE - 17.48
Forward PE - 13.09

I don't need to look at their cash because they just confirmed at least 10% revenue and earnings growth per year for 5 years! The benefits of being in the sweet spot of a sector growing from 1.2B units to 5B units globally.

PE - 20.28
Forward PE - 13.95

I don't need to look at their cash either because Google is knee-deep in mobile, social and web services that are growing strongly.

PE - 11.91
Forward PE - 8.96
Cash ~ $121B (~$127/share)  Remove the cash and the value of Apple's businesses (which are gaining market share) are in single digits. SINGLE f-n DIGITS!

They are knee-deep in mobile. They are growing their computer business while disrupting the PC and their own computers. Despite being called "high priced" by Ballmer (who laughed at the iPhone and is now blatantly using Apple's strategy), the iPhone continues to take global market share.

Of all the above companies (and I am a big fan of IBM and GOOG), only QCOM and AAPL are completely leveraged to mobile and the next evaluation of computing.  Both are trading at the low-end of their multiples, except AAPL is trading with the lowest comparable metrics. The lowest, yet the best positioned to continue to take advantage of the mobile trend.

Another interesting fact, with today's decline, the cash-to-stock price divergence has become historic. It is now around 28%.

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