Tuesday, December 8, 2009

Some Apple "Equivalents"

In response to the Amazon post, there have been several comments about Apple (AAPL). This is yet another beloved company whose valuation has left the fundamentals behind. No stranger to momentum, Jim Cramer seems to think its worth $300 a share. This reason enough to be bearish on Apple.

At the current quote, however, the company ONLY has a market value of $175 billion. For this purchase price, the prospective investor could own any of the following Apple-equivalents:

Coca-Cola + Boeing

Nike + Kraft + Nokia + Disney

McDonalds + Intel

Pepsico + ConocoPhillips

Hewlett Packard + MMM

Cisco Systems + Texas Instruments

Take your pick. Feel free to mix and match.

Or just buy good 'ol Johnson & Johnson! All of it. JNJ will be around 100 years after Apple is a distant memory.

A bonus: J&J pays a dividend.

What a quaint concept!

Disclosure: No positions.


  1. Apple made $11b in traling free cash flow vs 170b valuation and an enterprise value of 140b (net of cash).

    So a pe of 13 for a fast grower with incredible leverage for further growth in all their markets, not to mention a free option on future product hits.

    How can one not see the value at this price?

  2. ...I'll make a further prediction here that by next year's end Apple will be in the top 3 most valuable public us companies with a market cap of 300b plus.

  3. You are clearly more sanguine than I am that AAPL's performance is sustainable. My firm bought Apple when it had a $5 billion market value. That was within the last 7/8 years. The current valuation implies that recent performance with continue forever. Not taking that bet.

  4. Hi Lonely Value,

    I'm a big fan of yours and would like to get into value investing. Are there any books you would recommend? (my email is jda284@gmail.com)