Check the headlines online, on TV, or in newspapers. Every which way you look there are contradicting indicators for everything. If it’s not blue, it’s red. If it’s not bulls, it’s bear (or, just more bull). Take Apple’s stock. Please. Is it a buy or not?
Basic Math Matters
A company’s stock price is often a reflection of the overall market, a company’s financials, competition, profitability, and a whole bunch of mumbo jumbo which is used to influence the market one way or another.
Apple’s stock has been languishing in recent months, and for what reason? Who knows? The company’s financials have never been better. Growing revenue, growing profits, growing unit sales.
The company’s price to earnings ratio is among the strongest ever for a company Apple’s size. Numerical indicators say all is well and the future looks rosy.
So, what’s wrong with the stock’s price? Fear. Stock market analysts are a crazy, mixed up bunch of fickle and fruitcake-laden impostors who act more like 12-year-old girls at a slumber party.
Amazon loses big money and analysts call that a good sign of disruption. Google’s Android OS becomes the dominant smart phone OS in units, and analysts declare that ‘Android is winning.’ That, despite the fact that Amazon and Google do not make money with their wares.
Amazon has never been a big money maker, despite owning the online market for sales and media content. Google is wealthy, of course, but just as Microsoft can’t shake itself out from Windows and Office and make money on anything else, Google remains a one-trick pony company with most revenue and profits coming from search and advertising, both of which are beginning to decline in the mobile world.
On the other hand, here’s Apple, with no debt, no resource issues (other than keeping up with demand), and a full line of highly profitable products, still growing in sales, beloved by customers who flock to their crowded stores, and what advice do we get from the headline makers about AAPL?
Buy. Sell. Apple is doomed.
One new report says Apple and Microsoft are both likely to make more money by licensing technology to Android smart phone makers than Google will make selling mobile advertising. Another headline says Apple’s retail stores have double the sales per square foot as number two– jewelry retail Tiffany’s.
Who can make heads or tails of all that conflicting information? Me. Walk into any Apple Store (or three or four stores) and watch what happens.
Customers are lining up to buy iPhones, iPads, Macs, and all the add-on wares they can afford. Apple’s real numbers and trends are solid and going upward and forward. Despite the executive boardroom adjustments, and desperate competitors giving away their products for free, the numbers still don’t lie.