Apple Inc. is one of the American multinational technology company and it was placed in Cupertino, California. It is designing, developing, and selling consumer electronics, computer software, and online services. This is considered one of the big tech technology companies that are including Amazon, Google, Microsoft, and Facebook. Apple stock at https://www.webull.com/quote/nasdaq-aapl was one of the best stocks to buy. The stock is up 70% and it is expectations for the iPhone 12 are extremely high. And stock buybacks are having less of an impact on the company’s earnings per share with Apple’s market cap at nearly $2 trillion.
The Valuation of AAPL Stock
- At the time, the apple stock was trading at 15.9 times the company’s forward earnings. AAPL stock is not looking quite so cheap anymore.
- Apple’s price-earnings ratio, its price-sales ratio, its price-book ratio, its enterprise multiple, and its price–cash flow ratio are all currently more than twice their five-year averages, according to Generation Portfolio ManagementCEO Randall Abramson.
- The stock is priced for beyond perfection, a bad quarter, product flaws, production issues, a cyber-incident, or competitive disruption that could be leading to a large correction.
- At the same time, the valuations of the entire tech sector have gotten historically stretched as well. For much of the past decade, the S&P 500’s tech sector traded at a forward P/E multiple of around 15 times. Today that forward earnings multiple is 25.5 times.
- The good news is that the tech sector’s forward earnings multiples are still nowhere near the peak of the dot-com bubble when they climbed above 45.
- Unfortunately, Apple may not even need to misstep to trigger a correction by AAPL stock. The upcoming launch of the iPhone 12 is through the roof. The iPhone 12 is expected to be Apple’s first 5G-compatible phone.
- Loup Venturesanalyst Gene Munster says that demand for a 5G iPhone will be large. But, it is demanding for the product that may not be as big or come as quickly as Apple’s 57% rally so far this year suggests.
A Better Big-Tech Bet
- Apple is at risk of falling victim to unreasonably high expectations and its strong market performance in the near-term. But while expectations for Apple are through the roof, the expectations for Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) seem to be at a low point.
- The time to buy AAPL stock is not now when the iPhone 12 launch is right around the quarter. The time to buy Apple will be when investors are panicking about what’s coming next.
You can get more latest news of Apple at https://www.webull.com/newslist/nasdaq-aapl.
Disclaimer: The analysis information is for reference only and does not constitute an investment recommendation.