Deny it all you want, but Wall Street discounts Apple because it has much less confidence in leaders not named Steve Jobs. If I had a say in the company's succession plan (enter the following half-serious, half-hyperbolic statement), it would have been to spend as much of the company's cash as necessary to hire Jeff Bezos away from Amazon.com. Investors have confidence in Jeff Bezos.
Up until the past three months or so, Apple has largely outperformed Amazon. But that's in the past. While it can be comforting to live there, the approach often does not end well for investors.
While bulls lament Wall Street's refusal to tag Apple with a frothy valuation, Amazon more than maintains its ambitious P/E. And the stock tends to do a better job of establishing highs and sustaining them. Don't get me wrong, it's volatile and it has its share of ups and downs, but you will hear few complaints from Amazon longs that the market is holding the stock down.
Throw out everything you thought you knew about the P/E ratio. It's old school, outdated and useless to measure a company's "valuation" with it. Valuations no longer mean much, if anything at all. The P/E ratio is a gauge of investor confidence. Does this company have the pieces in place to not only sustain and maintain, but achieve continued hyper growth over the long-term?
Despite all of the faux uncertainty bears try to cook up at Amazon, the situation there, with Jeff Bezos steady at the helm for more than a decade, provides plenty more answers than it does questions. Can you honestly say the same about Apple?