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      12-06-2018, 01:18 PM   #17
BayMoWe335
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Quote:
Originally Posted by JohnnyCanuck View Post
You do have a blind spot on AAPL versus others. Your fundamental analysis of AAPL isn't wrong, but the immediate need to be dismissive of the trading levels of MSFT or AMZN to justify your point of view is.

MSFT and AMZN are exceptionally well positioned from a forward looking perspective. They are the largest two cloud services providers and they are enjoying huge growth in the sector. While in the consumer AI space, MSFT clearly runs behind AMZN/Google, in the underlying tech space it is very advanced and well positioned in both AI and IoT. AMZN is not only the world's largest cloud services provider, they are also the world's largest advertising platform. Neither AMZN nor MSFT are inappropriately valued at their current trading levels with a forward outlook. 2018 projected revenues for MSFT are $124 billion and $137 billion for 2019. AMZN's are $236 billion and $280 billion respectively. The trading value respects this growth.

I am not arguing that AAPL is overvalued. I'm in the minority, Tim Cook is the best thing to happen to AAPL in decades. While he lacks the marketing sleight of hand of Steve Jobs, he's a substantially better businessman (not to mention a better human being). He is as profoundly important to AAPL as Satya Nadella has been to MSFT.

As to general gist of the thread, there is significant reason to worry about the US economy and market. The decision to stimulate a healthily growing economy will have significant negative repercussions. Further, the decision by so many companies to use the stimulus for non-stimulating purposes (eg. stock buybacks) as opposed to allowing overdue wage growth (for example) results in just more wealth concentration which does nothing to improve fiscal or economic fundamentals. I don't know what the outcome will be ... just that it won't be good.
Apple services are bigger than AWS, just FYI and are growing at 25%.

You're also paying 3X more MSFT and 10X more for AMZN's earnings. AMZN is a essentially a low margin retailer with a fantastic Web Services business, but still smaller than Apple services alone.

Apple made $60B in profit in 2018, the next most profit was Google with $22B, has an additional $100B (over 10% of their shares) buyback, $250B in cash, and trades at 12X earnings today.

I like MSFT, but it's already fully valued. Apple is being valued as a hardware company while services are growing at 25% and are already a $40B/yr business.

Apple has 300M paying subscribers, over 1.3B active devices to monetize, and are the clear leader in luxury mobile, tablet, and wearables. The numbers said people are willing to pay more for these devices while unit volume has not suffered in their most important business, iPhone. They sold more iPhones in 2018 at higher prices than 2017.

I own MSFT too, but the web services business is going to be competitive as hell between AWS, Azure, Google, and IBM. Margins will come down too.

Most recent 12 months Net Income:

Apple:$60B
Google: $22B
Amazon: $8B
Berkshire Hathaway: $27B
Microsoft $17B
Facebook: $19B
Samsung Mobile: $8B

In the end, companies have to produce earnings, so that top line growth eventually has to be turned into EPS. Apple's earnings and buyback will grow EPS at 10-12% without even growing the top lines. BTW, Apple just posted 18% revenue growth for the year...which is more than your forecasted growth for MSFT. Can they do it again? We'll see, but again, the EPS are going to grow simply because of the buyback and even modest revenue growth.

Show me a company that's going to take Apple's business over the next 5 years.

Last edited by BayMoWe335; 12-06-2018 at 01:25 PM..