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TheStreet Open House

Apple Comeback Begins Attractively Priced

Stock quotes in this article: AAPL, AMZN, HPQ

NEW YORK ( TheStreet) -- At the end of my most recent article was a postscript regarding Apple (AAPL). It was a reminder of the great reputation this superstar enjoys.

To recap, the announcement said:

Turns out, we spoke too soon. For the ninth time in a row, iPhone ranks 'Highest in Customer Satisfaction with Consumer Smartphones' by J.D. Power and Associates. iPhone ranked highest in a study that looked at the following categories: performance, physical design, features, and ease of operation. In fact, iPhone has ranked highest in each of these studies since the first iPhone was introduced.


So many pundits and critics have virtually pronounced Apple shares doomed to a long, grueling descent into the dungeon of has-been companies. Yet, when you look at the following one-year chart you'll see that while the doomsayers prattled on about this cash-rich "Mercedes" of smart phones, tablet computers (iPad and mini iPad), laptops and desktop computers, it has started back up the price ladder. AAPL Chart AAPL data by YCharts

Look at the solidly positive direction of AAPL's trailing 12-month cash from operations and its quarterly revenue per share. Even at the current share price of around $462, AAPL is trading with a trailing PE of slightly more than 10 and a forward (one-year) PE of just 9.3.

This remarkable cash cow, which generates about $16 billion in cash per quarter, is selling at a price-to-earning-to-growth (PEG) ratio of 0.55. This indicates the price per share only reflects about half of the earnings growth rate of the company. Absurd and mouth-watering all at the same time!

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Although it's not an "apple-to-apple" comparison, when you consider that Amazon (AMZN) is selling for around $255 a share and lost money last quarter you begin to wonder. AMZN is selling at a forward PE ratio of over 71 (that's 71 times earnings) and has a PEG ratio (year-year expected) of 4.33 suggesting overvaluation. So by comparison you can discern just how inexpensive the shares of AAPL truly are.

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