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John Layfield
It happened. I am officially the only person to write for TheStreet.com while holding a championship in professional wrestling. Last Sunday at WWE's Wrestlemania, I defeated Chris Benoit to become the new U.S. champion.
So now if you don't like my articles, I will hit you with a chair. Speaking of irrational behavior, I just finished reading Icon, the biography of Steve Jobs. Though slow at times, the book is a good read. Jobs is portrayed as a very smart man who has more than his share of quirks -- in fact, he is portrayed as a freaking nut. Whether he's a nut or not, the man knows how to innovate and make money. Jobs has revolutionized consumer electronics. Even after Wednesday's big move, Apple (AAPL Quote) is down more than 20% from its 52-week high of $86. I believe this is a buying opportunity. Apple has a historic multiple between 40 to 50 times. It is now trading at a forward multiple of around 27, based on consensus fiscal 2007 estimates of $2.62. Apple is given this large multiple based on the fact that you can't put a valuation on innovation. The iPod changed the way consumers listen to music; the video iPod will change the way consumers view content. Two sure things are bound to happen: Advertising has to change to survive, and Apple will revolutionize the way content is distributed. Advertising is a speculative bet; Apple is a sure thing. Tech growth stories, which Apple is, have traditionally traded around three to four times enterprise value to sales. Given a conservative view, if Apple maintains double-digit growth, then it is easily a $90 stock. Apple is a dream company. No debt, and over $10 per share in cash. Add to that the fact it is still a growth story and you have a stock that is cheap. To watch JBL's video take of this column, click here.
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