One of the more interesting conversations I have had lately has been with non-Apple users about Apple stock. It is an apt subject given Apple’s blow out numbers last night. Second-quarter profit ~doubled, demand for iPhones and iPads exceed supplies. Net income in Q2 was $5.99 billion ($6.40 a share), from $3.07 billion, or $3.33, a year earlier.
While I have long been a fan of the superior Mac versus Microsoft machines, it is the iPod/iPhone,/iPad phenomena that is driving Apple towards being the most valuable company on earth.
These investors are certainly aware of the sales and profit growth, but there is a sort of blind spot as to how far it could run. I have heard from various parties that the move in Apple’s stock is “ridiculous” “overdone” “insane” “proof of madness.” Apple’s stock price, despite the reasonable P/E, is “incontrovertible proof we are now in bubble territory.”
When I asked these folks if they own any Apple products, they nearly all say no. “My kids have an iPod” was the most I got out of any of them. (That’s more than we can say for Steve Ballmer’s spawn).
Which raises the question of hands-on-use. Can you be an investor in the Tech sector and NOT own an iPad? Can you seriously trade tech/telecom, and not have hands on experience with the Apple magic?
This question goes back to the days of Peter Lynch, the Fidelity Magellan manager who advised people to invest “in what you know.”
Can investors today ignore a hot product? Do you have to own the latest and greatest in order to trade the names? How important is this concept to the average investor?
Popular or Best? (ATPM January 1998)
Analysts Still Underestimate Apple (Real Money, Jan 13, 2005)
Is Disney/Pixar the sequel to Apple/NeXT ? (January 30th, 2004)
Apple morphs into a Consumer Electronics Co (April 25th, 2004)
Apple to Music Industry: Monetize Your IP (April 28th, 2004)
Apple Now a Major Music Retailer (RealMoney.com 12/08/05)
Apple Now More Valuable Than Microsoft (May 26th, 2010)
A Few Thoughts on Steve Jobs/Apple (January 18th, 2011)