Is Apple Stock Still a Buy at Today's Prices? No one likes being late to a party, especially one where the first ones there get the best party favors. The Apple (AAPL) party started long ago, but does that mean it's too late to join the festivities?

For the past decade, Apple's stock has trounced those of longtime software archenemy Microsoft (MSFT), traditional PC hardware vendors like Dell (DELL) and Hewlett-Packard (HPQ), and smartphone players like Research In Motion (RIMM).

Apple grew large enough to briefly claim the title of most valuable company in the world by market cap, although Apple and ExxonMobil (XOM) pass the crown back and forth. Even at its size, top-line revenue grew by 66% last fiscal year, while bottom-line profit jumped an astonishing 85%. It's mind-boggling that one of the already-biggest companies in the world is still putting up growth rates like that.

Am I Too Late?

As great as the past 10 years have been, how do the next 10 years look? Apple has lost its iconic co-founder, and iPhone growth has made iOS Apple's dominant operating system, overshadowing Mac computers and OS X.

Does Cupertino have more tricks up its iSleeve to maintain its growth momentum? Or is Apple's recent surprise earnings miss a sign that the company's best days are behind it? More importantly, is the stock still a buy at current prices?

Even More iPhones

Last year's iPhone revenue put up an 87% jump to $47.1 billion, yet CEO Tim Cook pegged Apple's worldwide mobile phone market share at just 5%, leaving plenty of room for future growth in Apple's most important product category.

Last quarter's "miss" was largely due to the fact that the media had sensationalized the pending "iPhone 5," causing buyers to delay their purchases. And purchase they did, as 4 million iPhone 4S units were sold over launch weekend. Average selling prices have been rising for years, most recently $650, and the 4S promises to continue that trend.

Even More iPads

The iPad is incredibly young in contrast, having been around for roughly a year and half. The tablet revolution is real this time around, with the iPad leading the way. It shows the same promising signs the iPhone did a couple years ago, with last year's iPad revenue soaring 311% to $20.4 billion.

Even as the tablet world is being stormed by a slew of Google (GOOG) Android competitors, including worthy opponents like (AMZN), the whole pie is growing so quickly and Apple has little to worry about with the iPad counting as three of every four tablets currently sold.

Enterprise Time

Businesses have long been dominated by Windows, which means there's plenty of market share up for grabs. Even Forrester Research, a longtime opponent of enterprise Macs, has changed its tune and now recommends a sweeping sea change. Forrester provides consulting services for IT professionals, so its stamp of approval should go a long way.

Mac sales were especially strong last quarter, but that segment could be further propelled by enterprise adoption, displacing aged PCs running Windows XP. Even the iPhone is being deployed and tested with 93% of Fortune 500 companies.

Key to China

For the Chinese, an iPhone is as much a status symbol as it is a versatile telecommunications tool. China is vast frontier of possible penetration, and despite only having six official retail stores -- not including the fake ones -- Apple's China sales over the past 12 months have increased sixfold.

Once Apple inevitably brings on China Mobile (CHL), which is the world's largest wireless carrier by subscribers in the world's largest mobile phone market, we will see a whole new era of growth. China Mobile is larger than rival and official iPhone carrier China Unicom (CHU), and currently has 633.5 million mobile subscribers, of which 43.2 million use 3G -- while the whole country has 952 million mobile users. 3G penetration in the country is a tiny 4%. So far, China Mobile has roughly 10 million iPhones running unlocked on its network. The carrier is Apple's key to China.

A Real Apple TV

Despite the challenges current TV manufacturers face, Apple is the only company with the weight and willpower to redefine the broken industry. It's expected to have a TV set in the works, and Apple's brand has an uncanny ability to command premium pricing without consumers even thinking twice.

Margins would be lower due to the economics of the industry, but Apple should be able to keep its ink black. The TV industry is a $100 billion market for Apple to tap, and it would be silly to pass up.

Is It Worth It?

The price chart comparison above makes you wonder: is Apple still worth its lofty price?

Revenue Growth (5-Year Average)
EPS Growth (5-Year Average)
Price / Sales
Forward P/E
Research In Motion
Source: Morningstar. Growth data as of most recent full fiscal year; valuation data as of 11/11/11.

Looking forward, Apple's valuation looks downright cheap when comparing its growth with other tech players. Forward P/E is calculated based on consensus estimates of projected earnings and except for last quarter, Apple typically demolishes quarterly expectations, making its valuation even more compelling.

While RIM's historical growth figures also appear attractive on the surface, its future prospects look dimmer every day. Besides, RIM's shareholders speak for themselves, and they'll tell you first hand: They're not a happy bunch.

The next decade's prospects look just as good, if not better, than the last. The company has perfected its supply chain, and its most important product categories have gained unstoppable momentum. There are numerous opportunities that haven't been fully tapped yet, and once they are that momentum will steamroll through new markets.

Apple is still a buy -- worth every penny, and then some.

Motley Fool contributor Evan Niu owns shares of Apple and, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Apple, Microsoft, China Mobile, and Google. Motley Fool newsletter services have recommended buying shares of Microsoft, Dell, Google, China Mobile, Apple, and; and creating a bull call spread position in Apple and Microsoft.

Increase your money and finance knowledge from home

Investing in Emerging Markets

Learn to invest in a globalized world.

View Course »

What are Penny Stocks

The lucrative and dangerous world of penny stocks.

View Course »

Add a Comment

*0 / 3000 Character Maximum


Filter by:
Amr Salah

I have the pleasure to brief you on our Data Visualization software
"Trend Compass".

TC is a new concept in viewing statistics and trends in an animated
way by displaying in one chart 5 axis (X, Y, Time, Bubble size &
Bubble color) instead of just the traditional X and Y axis. Discover
trends hidden in spreadsheets. It could be used in analysis,
research, presentation etc. In different business sectors, to name a
few we have Deutsche Bank, NBC Universal, RIM, Vanguard
Institutional Investor, Ipsos, Princeton University as our clients.

NBC presentation on TED using Trend Compass exported Videos. Now on
CNN Money / Fortune (Dec 21st,2010):

The following link is for our new Geographical Trend Compass
(Earthquake in Japan - Mag vs Depth vs Time):

Link on Ads Monitoring on TV Satellite Channels. Pick Duration (Ads
daily duration) vs Repeat (Ads repetition per day).

Link showing drilling feature (Parent/Child) - Just double-click on any

Link on UK Master Card vs Visa performance :

Links on Funds:

Link on other KPIs :

Link on Chile's Earthquake (Feb 27th 2010):

This a link on weather data :

This is a bank link to compare Deposits, Withdrawals and numbers of
Customers for different branches over time ( all in 1 Chart) :

Misc Examples :

This is a project we did with Princeton University on US unemployment :

A 3 minutes video presentation of above by Professor Alan Krueger
Bendheim Professor of Economics and Public Affairs at Princeton
University and currently Chief Economist at the US Treasury using
Trend Compass :

You can download a trial version. It has a feature to export
EXE,PPS,HTML and AVI files. The most impressive is the AVI since you
can record Audio/Video for the charts you create.

All the best.

Amr Salah
Trend Compass Team
Epic Systems

December 27 2011 at 7:50 AM Report abuse rate up rate down Reply

This article read like an Apple butt kissing love letter.

November 16 2011 at 12:00 PM Report abuse rate up rate down Reply

If you could stay at home and work from your computer and make money as much as you want, would that interest you? And what if this was much easier then you think it is, because there is a secret for you to learn and follow that would be like your own "cheat sheet" for trading? Would you be interested? Well that's what they’ll have to offer you. Just google Gold Trading Academy and take a look at what they have to teach you..

November 16 2011 at 12:42 AM Report abuse rate up rate down Reply

When you see AAPL think Netflix

November 15 2011 at 12:22 PM Report abuse rate up rate down Reply