I think you should all buy Apple stock (AAPL). I'm not a broker or councilor or licensed in any way...all applicable disclaimers here...but I have been following it and I think it's a steal that you should buy even with the 10% run-up last week. Here is why:

AAPL currently has a PE ratio of 37.6 which while not small is not out of line with others in it's sector:

DELL: 20.4
MSFT: 22.5
HPQ: 36.3

given it's revenue growth rate compared to it's peers:

AAPL: 89%
DELL: 14%
MSFT: 7.8%
HPQ: 8.3%

The main difference that sets AAPL apart from for it's peers is it's growth rate yes but also its growth potential.

Apple has a lock on 70% of the music download business but that business represents only 4% of music sales. It's easy to be convinced that Apple's iTunes business unit has reached it's peak the facts show it's barely gotten started. The adoption of music downloads is only going to accelerate and Apple has shown it is capable of delivering the goods as it does. Yes there are going to be competitors but their entry only levies the expansion of the downloadable music business. In 5 to 10 years there will only be a downloadable music business. The idea of going to Sam Goodies and buying a plastic disk with 11 songs on it is completely out dated and obsolete. Apple has the potential to expand this business 10 fold over the next few years and the massive growth iTunes has shown is not a blip but a sign of things to come. Even a 10 fold increase over 10 years will still only net Apple 30% of the total market share. 10 fold is conservative.

Apple has a lock on the music player business. That business will follow lock step with the growth of the music download business. Apple has a strong brand and an effective retail channel to get their products out the door. They will eventually succumb to competition for market share but will still hold a significant share of the market and the iPod brand is strong and getting stronger.

In the next year Apple will be releasing a number of new Mac systems as part of it's Intel migration. Unlike much of the computer business Apple actually has something new to talk about. The 3 products they have released so far are very popular and selling well and I expect you'll see the rollout of new iBook and PowerMac systems to snatch strong sales at well. This is a growing market for Apple. Unlike Windows, Apples systems have only a 4% market share. Strong sales and good promotion could see that rise by as much as 50% for a total share of 6% by the end of the year. The addition of Windows compatibility, new models and a significant new release of the OSX software (named Leopard) before the holidays will mean a big boost to year end sales for Macs. The transition will be complete by the fall and the product line shiny and ready to go to consumers by October. Unlike Microsoft who blew off releasing their new software until the new year which is bad for PC makers looking to sell PC's at Christmas and good for Apple who will have their products on store shelves.

So my advice is to do some research and buy AAPL. At $70 it's a steal. I see it going to $120 by the end of the year. Even conservative analysts estimate it at a $90 stock. I bought my position at $59 and have already made a 10% gain on it in one week. There is a lot more to go.

 

at $70? maybe at $20 or 30 I would think about it

 

ok, don't make money, nobody is twisting your arm.

 

I'm making money don't worry

 

and a reason why you shouldn't

i only buy stocks in companies i believe in / use, etc. never been an apple user. never owned a piece of apple hardware, nor software and don't plan on doing so, ever.

there are plenty of stocks that make 10% runs in one week. i don't shop at WMT, i don't eat MCD, hence i don't own those stocks. It's a wee bit pseudo Buffet-esque but... it works for me.

 

here's a few fundamentals I calculated:

AAPL's Return on Capital is a quite respectable 233%. That means, for every $1 Apple spends, they make $3.33 back. That's quite good!

BUT... At their current stock price, their Earnings Yield is quite low at 3.95%. (If it was 5%, that means it'd take you 20 yrs to make back the money you spent in buying the company.)

(p.s.-- Pls don't ask me to post my formulas-- I won't do it. I spent a HUGE amount of time and research putting them together, so I won't divulge. Either take my word for it, calculate it yourself... or don't.)


EDIT-- whoops. In my earlier posting, I did the calcs wrong. my bad. fixed, and edited my text.

 

Here's numbers more in line with what I am willing to invest in:

MVL:
Return on Capital: 3024%!! (The 2nd highest I've ever calculated for any company with a market cap over $50M)
Earnings Yield: 10% <-- If the company's current income stream remained steady, it'd take you 10 yrs to make back all you spent if you bought the entire company outright.

full disclosure: I own MVL stock


And here's one that is more typical:

EGY:
Return on Capital: 154%
Earnings Yield: 16% <-- pretty cheap!

full disclosure: I own EGY stock


Don't just take my word for it-- do your own calculations!

 

Did some calcs for DELL and MSFT.

I gotta give it to MSFT... for every $1 they spend, they make back $7.12!

And DELL is actually *relatively* cheap, with an Earnings Yield of 7.22%


EDIT-- re-did my #s.

 

i've always been an Apple user, I only wish they had more games like the PCs. I guess this will all change with the Intel migration and apple will be competing with the likes of Dell, HP, Gateway, etc. For their next operating system, 10.5, they'll have "Boot Camp" which is a program that allows for PC apps to run on the new intel mac with hardware support, thus making it virtually a "PC" as well. There is a very promising future for apple

 

Here's some food for thought - the CEO of The Blackstone Group had similar feelings about Apple. . . in 2002. He got into about $30 Million of Apple stock when it was hovering in the low/mid-$20s range (I think). Not a bad return on his investment, right?

Also, Apple's stock has nearly trippled in the past year. Well, it nearly trippled, and is now at about twice its price from a year ago. The big run-up may have already happened for the foreseeable future. I guess its worth a gamble if you have big money to spend and can take a long position, hoping that the market isn't saturated with iPods, that nobody figures out a better was of digital music distribution, and that the Intel chips work as well as advertised. Oh yeah, and they're down ~1.5% today.

I'm not saying whether or not to buy, just giving another opion on the stock. . . I'll leave the real analysis to the guys who actually get paid to do it.