AAPL - Apple Inc.

[giofranchi]

This year's estimate of smartphone industry profit share. Apple 94%, Samsung 11%, everybody else negative.

 

http://9to5mac.com/2015/11/17/aapl/

 

Yes! I have seen that. Amazing! :)

 

Cheers,

 

Gio

[abyli]

I can not find any company that has higher quality business than AAPL and cheaper than AAPL. The shares outstanding are shrinking fast and business is generating tons of free cash flow.  I bet AAPL's earnings be higher than $100 Billion in next five years. If give 15 times of earnings, that is $1.5 T, if S/O shrinks to 4 Billion, price should be a little below $400 per share. 300%+ return in 5 years conservatively. Why people do not buy AAPL today?

[DeepSouth]

I can not find any company that has higher quality business than AAPL and cheaper than AAPL. The shares outstanding are shrinking fast and business is generating tons of free cash flow.  I bet AAPL's earnings be higher than $100 Billion in next five years. If give 15 times of earnings, that is $1.5 T, if S/O shrinks to 4 Billion, price should be a little below $400 per share. 300%+ return in 5 years conservatively. Why people do not buy AAPL today?

 

How does NI double over the next 5 years?

[abyli]

I can not find any company that has higher quality business than AAPL and cheaper than AAPL. The shares outstanding are shrinking fast and business is generating tons of free cash flow.  I bet AAPL's earnings be higher than $100 Billion in next five years. If give 15 times of earnings, that is $1.5 T, if S/O shrinks to 4 Billion, price should be a little below $400 per share. 300%+ return in 5 years conservatively. Why people do not buy AAPL today?

 

How does NI double over the next 5 years?

 

Years' of research and thinking about AAPL give me that confidence and that is a very conservative estimate. If you do not have a rough idea what the business looks like in 5 years, you should not invest. Thanks.

[giofranchi]

I can not find any company that has higher quality business than AAPL and cheaper than AAPL.

 

+1

 

Another company that is very high quality imo and very cheap too right now is GILD. But I agree: not as high quality as AAPL! ;)

 

Cheers,

 

Gio

[Picasso]

Because that's not have you value $100 billion of earnings over five years?

[TheAiGuy]

I can not find any company that has higher quality business than AAPL and cheaper than AAPL. The shares outstanding are shrinking fast and business is generating tons of free cash flow.  I bet AAPL's earnings be higher than $100 Billion in next five years. If give 15 times of earnings, that is $1.5 T, if S/O shrinks to 4 Billion, price should be a little below $400 per share. 300%+ return in 5 years conservatively. Why people do not buy AAPL today?

 

How does NI double over the next 5 years?

 

Years' of research and thinking about AAPL give me that confidence and that is a very conservative estimate. If you do not have a rough idea what the business looks like in 5 years, you should not invest. Thanks.

 

That's not an answer to his question -- its an argument from authority. It seems unlikely that the iPhone business will double over the next five years. There are definitely vectors for growth (price increases, cycle speedup, volume increases) but doubling in 5 years, at this scale, is hard to see. Any car will take longer than 5 years to develop and reach that kind of scale, and its hard to see watches, iPads and Macs making up the differences. All of these are great business and all of them should grow but doubling in 5 years?

[johnny]

I can not find any company that has higher quality business than AAPL and cheaper than AAPL. The shares outstanding are shrinking fast and business is generating tons of free cash flow.  I bet AAPL's earnings be higher than $100 Billion in next five years. If give 15 times of earnings, that is $1.5 T, if S/O shrinks to 4 Billion, price should be a little below $400 per share. 300%+ return in 5 years conservatively. Why people do not buy AAPL today?

 

It is not really conservative to assume multiple expansion to 15x earnings, considering that the market has simply refused to give it anywhere close to that multiple, despite great operating performance. It is well understood that there is a skepticism about Apple's current size, and that skepticism will almost certainly not go away simply because Apple gets bigger.

 

I think a perfectly good case can be made for AAPL without multiple expansion.

 

How does NI double over the next 5 years?

 

Just think about how rapidly many Chinese and Indians are going to go from making less than the price of an iPhone per year to...substantially more than that.

 

The thing that is difficult for people over 25 to appreciate intuitively, I think, is how incredibly vital these devices are to the lives of so many people. I hear a lot of dismissiveness about Syrian refugees, implying that they aren't "true" refugees because they have iPhones. Not to get political but, when I hear that a Syrian refugee has come over to Europe in a liferaft with no possessions but his smartphone, I'm inclined to think that it is the commentator's position on smartphones that needs to be reconsidered.

 

I think the biggest risk to Apple's long term growth is that they miss out on India entirely, because it sure seems like there is a sort of minimum market share % that you need to stay viable, and it is possible they aren't there yet. China, they seem to have gotten there and are doing quite well, but the relationship with the state is a pretty big challenge.

 

But if India and China go well, you're talking about tens to hundreds of millions of new potential buyers every year, not being born, but simply leveling-up in economic terms. That's an incredible macro tailwind for the company.

[giofranchi]

The thing that is difficult for people over 25 to appreciate intuitively, I think, is how incredibly vital these devices are to the lives of so many people.

 

And don’t forget that those who are under 25 today will be 35 ten years from now… If used to carrying around their iPhones, they simply won’t stop doing so. Therefore, Apple’s customers will grow also because those who don’t use the iPhone so extensively today (over 35-40 years old) will instead be using it tomorrow.

 

Cheers,

 

Gio

 

[Guest Grey512]

I think "habit" alone won't deter iPhone users from switching to other devices.

The main reason why I won't ditch my iPhone today is the hassle of migrating my iTunes collection of media to another system.

 

 

 

 

[NewbieD]

In agreement with giofranchi here. From what I see around me iphone is quite sticky across age groups.

Itunes is one thing but there's also just the way the os works that's a hassle to learn again. And Apps, Pictures, files in icloud etc.

 

The same arguments can be made for android, but on balance it seems there's more churn from there to iphone - despite the price level. At least that's my impression. If anyone has data contradicting it would be interesting to see.

[fareastwarriors]

Goldman Says to Buy Apple Because It's Becoming a Services Company

 

http://www.bloomberg.com/news/articles/2015-11-18/goldman-says-to-buy-apple-because-it-s-becoming-a-services-company

[rkbabang]

According Watson, the Apple Watch is going to be the hottest thing this Christmas.

 

IBM's Watson Says Apple Watch Tops Holiday Hot List

 

[innerscorecard]

Just because China's consumer spending has gone up straight one way in recent years doesn't mean it can't go in the other direction, too. That's obviously one of the biggest reasons the stock is cheap today. It's not simply inexplicable.

[innerscorecard]

That said, I agree that if spending slows, smartphones and other personal mobile consumer electronics would be among the very last things cut. I've seen this behavior myself many times across cultures.

[giofranchi]

The Evolution Of The Biohacking Ecosystem

 

http://techcrunch.com/2015/11/19/the-evolution-of-the-biohacking-ecosystem/

 

Cheers,

 

Gio

[LongTermView]

That said, I agree that if spending slows, smartphones and other personal mobile consumer electronics would be among the very last things cut. I've seen this behavior myself many times across cultures.

 

True, the smartphone is one of the few things people will refuse to sacrifice in hard times. Long aapl.

[Jurgis]

The Evolution Of The Biohacking Ecosystem

 

http://techcrunch.com/2015/11/19/the-evolution-of-the-biohacking-ecosystem/

 

 

OT: http://www.thync.com , http://pavlok.com and https://nootrobox.com/ mentioned in the article sound interesting. Might try.

[Liberty]

Not too bad.

 

http://appleinsider.com/articles/15/11/27/apples-ios-clenches-783-of-us-mobile-online-shopping-over-thanksgiving-360-more-than-android

 

"Apple's iOS clinches 78.3% of U.S. mobile online shopping over Thanksgiving, 360% more than Android"

[Viking]

Here is a link to Above Avalon article of iPad mini. http://www.aboveavalon.com/notes/2015/11/24/peak-ipad-mini

 

If we look at Apple's business over the past year, one category has been very weak: iPad. I did not understand that it is the iPad mini that is responsible for most of the decline. What is the problem? Apple launched two larger screen iPhones (6 and 6 plus). Apple was able to cannibalize iPad mini sales with the much more profitable iPhone. Brilliant.

 

There clearly is a place for the iPad mini in Apple's product arsenault.

 

The iPad Pro will be key to the iPad category moving forward. If the iPad Pro starts to cannibalize lap top sales the next few years we could see some very solid growth numbers in iPad once again. One of the reasons I love Apple is they are not afraid to kill a device if it positions the company properly for the long term. Short term category sales will be lumpy; medium term results will be much better.

 

I'll take higher lumpy returns over lower more predictable returns. And I will be happy to take advantage of the volatility in the stock price caused by lumpy quarterly results. Buy low and sell high; rinse and repeat...

[innerscorecard]

Have you sold high (or I suppose in the case of Apple, "fair") yet? Say, at 18x TTM P/E in late 2014? Einhorn didn't, because he wanted to wait for a premium multiple, and I didn't either. Who knows if that is right or wrong in the end.

[Viking]

Apple was my largest position for almost two years. Last fall I actually went to 0, selling my last position at $118. At the current price of $118 I think Apple is cheap (earnings are up 30%  the past 12 months) so I am happy to hold some as a core position. I also buy chunks when it sells off aggressively and sell these chunks when it runs up 4-6%. I have done this 4 or 5 times the past 3 months. The reason I am becoming a trader with a small part of my portfolio is I think we are going to see lots of volatility the next 6 months; the market feels like it is becoming bipolar (with sentiment going from one extreme to the other and then back). Almost 1/3 of my portfolio is cash right now. If we get a Christmas rally I will be happy to move to 50-60% cash... And then wait for the next sell off.

[giofranchi]

Almost 1/3 of my portfolio is cash right now. If we get a Christmas rally I will be happy to move to 50-60% cash... And then wait for the next sell off.

 

I don’t like to hold cash, but I hold both FFH and BRK instead. If a sell off comes, I’ll be willing to dispose of my FFH and BRK shares, and redeploy the proceedings in companies that I think might perform better in a recovery, AAPL included.

 

Cheers,

 

Gio

 

[innerscorecard]

Thanks, Viking. I think it takes discipline to actually sell at fair value, and that is one thing I want to learn to be better at.

[intothebreach]

In case this proves useful to someone, here's the strategy I've been following for the past few years: whenever Apple reaches a new all-time high, I sell a little (~10%). And whenever it gets cheap again, I add back what I sold and then some. When it gets ridiculously cheap, I usually end up also buying the longest-dated LEAPS available at that time.

 

There's no question that my sales are made at a price that is beneath the intrinsic value of the stock, but since the stock is volatile, I view it as an opportunity to lower my cost basis (in exchange for some capital gain taxes). For what it's worth Apple has been my largest position for many, many years.