Apple Inc. (AAPL), Google Inc (GOOG): Man, Was That Terrible Advice! I’m Giving it to You Again

If you haven’t seen it this way, I hope this opens your eyes as to how cheap Apple Inc. (NASDAQ:AAPL) has become. Think about this for a moment. The market is saying that Apple’s ability to generate growth in profits is essentially lesser than Microsoft Corporation (NASDAQ:MSFT) today. And while I own shares of Microsoft (and will continue to for many years,) let’s take a look at what we know:

The legacy PC business is entering a decline in the face of a secular shift in the way we use computers

Microsoft has (very publicly) failed to make a meaningful entry into mobile computing

We are years away from market saturation in mobile, where Apple Inc. (NASDAQ:AAPL) and Google’s Android-based devices dominate

And there is no evidence showing that Apple will grow at a lesser clip than Microsoft going forward. But the market seems to think otherwise.

Foolish bottom line

If you bought Apple, hang in there. The share price has plummeted, but there’s no evidence to support a declining business. To the contrary, the evidence seems to suggest that Apple will continue to grow its business.  If you have spare money to invest (and aren’t already overweight,) then the advice I gave you in September is even more pertinent today, especially with Apple. And while Google Inc (NASDAQ:GOOG)isn’t really expensive today, at least not historically, it is trending upwards. I guess one could say that it’s a “fair” price today, but not exactly cheap.

Most importantly, don’t follow my advice if you’re not planning to invest for the long-term. When I recommended Apple Inc. (NASDAQ:AAPL) in September, it wasn’t based on what the market would bear in a few months. There’s too much unpredictability in such a narrow window of time. Another table for a little perspective:

AAPL PE Ratio TTM data by YCharts

It’s important to note that yes, Microsoft is still growing, and while it’s down, it’s certainly not out of the mobile computing business by any stretch Be that as it may, seeing the market pricing Apple and Microsoft at essentially the same valuation just doesn’t make sense. To hammer the point home, here’s a look at net income:

AAPL Net Income TTM data by YCharts

I leave you with this:

Do you really think the market is pricing Apple Inc. (NASDAQ:AAPL) in a rational manner today? I don’t. Not even close.

The article Man, Was That Terrible Advice! I’m Giving it to You Again originally appeared on Fool.com and is written by Jason Hall.

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