Apple Inc. (AAPL)’s Valuation ‘Doesn’t Make Sense’: Analyst

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Regarding Apple Inc. (NASDAQ:AAPL)’s valuation specifically, Smith shared the following:

“This stock is at 10 times [earnings], should grow earnings by 20% over the coming years, and it trades at a 20% discount to the S&P. It just doesn’t make sense […] We think that there’s tremendous growth in these categories and that earnings are going to surprise on the upside come January”

We’d like to add one other metric to the discussion: the PEG ratio. Short for price earnings-growth, this ratio determines how investors are valuing a stock’s growth prospects. Shares of Apple currently trade at a PEG of 0.59; typically any figure below 1.0 signals an undervaluation. In comparison to its peers, Apple is also cheap, as Google (1.4) and Microsoft (1.5) are more than twice as expensive.

Still, there are always two sides to every argument; let us know how you’re trading the stock in the comments section below. For more Apple Inc. (NASDAQ:AAPL) coverage, continue reading here:

Wall Street’s Apple Analysts are ‘Out of Whack’: Study

What is Apple’s Secret Hedge Fund Buying?

The Top 4 Tech Stocks to Own in 2013

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