SOURCE: YAHOO FINANCE
- Apple is a ‘ SLOW GROWTH’ and a ‘STABLE CASH FLOW’ stock.
- It is difficult to value this stock based on the earning and sales growth only. Reason being, it is sitting on cash reserves sit of almost 285 billion dollars currently.If Apple decides to use this money to buy the outstanding shares at the current market price of 178, its ‘outstanding shares’ will decline by almost 1.6 billion. Its count will reduce to 3.4 billion.
- Its market cap is currently at 750 billion dollars. Using its current ‘MARKET CAP’ as a fair value, its share price could be valued at $ 220.
- Obviously, this calculation goes a step too far and makes significant assumption that Apple will use all its cash to buy the free stock.
- This analysis should probably explain why the likes of Mr. Buffett are continuing to increase exposure to this stock. It is simply a ‘CASH COW’.
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