An Apple Is Not A Lemon

I missed out on the APPLE chase that netted a few of my friends decent returns last year.

Ignoring calls to buy APPLE which was an influx of about  half a dozen APPLE trade ideas in my mailbox a week (till Nov where they mysteriously vanished),  I feel slightly foolish for entertaining the idea of buying APPLE now.


This is the 5 year chart of APPLE Inc. Its share price is USD430.47 at Friday close.

My rudimentary analysis of equity is pretty laughable.

First I pick a viable company and not just the hole in the wall Zygna (which I bought as a punt last Aug then sold in Sep I think for a small profit). Then I just pull out the market cap and the cash on hand and pretend I am Gordon Gecko .

APPLE Inc Market Cap 404 bio (vs 29 Dec 12 478 bio). Cash & Equivalents 137 bio. That works out to be $146 per share in cash making its share price just about $284.

I will usually scan the P/E and this time its a healthy 9.76 with an estimated 2013 P/E of 9.65. For me, under 10 is always a good number.

Scrolling through the balance sheets and wow. Retained earnings were 9 bio in 2007, they are 101 bio in Sep 2012. Long term investments and receivables up from zero in 2007 to 92 bio in Sep 2012.

Why didn’t I buy APPLE last year ?

I always had a problem with tech companies. Facebook and the gang. I did a small punt in Facebook the same time as I bought Zygna last year, bought at 19-ish and sold at 23. Nothing to scream about as tech companies still scare me. Blame it on 2000 and the tech bubble when I grabbed on to my first decent bonus and ran down to the banking hall looking for unit trusts to buy. The lady offered me Tech or Healthcare and guess which one I took ?

I sold at huge 50% loss just months later and no amount of investing consolations in the ensuing years ever made up for the error in judgement of a young trader.

But I realise that I am not looking at APPLE as a tech company these days. It is a market stalwart and a cash cow.

David Einhorn and the rest of the 226 hedge funds who own APPLE shares are eyeing that increasing pile of cash.

Apple with its spare cash could buy Twitter, Facebook, AOL & Dropbox & still have more than $50 BILLION left over!
Einhorn drops lawsuit versus Apple, ends challenge
Apple’s Profits Is Bigger Than Google’s Revenue
Apple iPhone generates more profit than Exxon Mobil
Breaking news: Apple is no longer bigger than the market caps of Spain + Portugal + Greece

Little old me is watching APPLE now. I will not be rushing to buy a thousand shares. Maybe just a combination of shares and a ELN for starters. My level will be 400 to 415, its Jan 2012 levels.

Hey, the DOW is back on track, NASDAQ up over 2% year to date, even Zygna is up 42% this year. APPLE is down 20% ?

Wish me luck.