Take Advantage of Apple Inc. (AAPL)’s ‘Steve Jobs Premium’

Page 1 of 2

Apple Inc. (NASDAQ:AAPL) has had a wild ride in 2012. After gaining over 74% on the year to touch an all-time high of $705.07, shares of the tech giant have fallen on fears of a disappointing first quarter financials, the looming fiscal cliff, a rather embarrassing Maps fiasco, and a shakeup in upper management. Now, the Cupertino bears (see “Here is Why Apple Could Fall Below $425“) will also argue that long-term worries about Apple include: (1) Tim Cook’s inability to be exactly like Steve Jobs, (2) departure from tried-and-true strategy with the iPad Mini, (3) strategic partners — such as China Mobile — unwillingness to settle for Apple-sided deals of yesteryear, and (4) a general lack of innovative products on the horizon.

Apple Inc. (NASDAQ:AAPL)

As we’ve recently discussed, one of Jim Cramer’s favorite Apple analyses (see “Jim Cramer Loves This Contrarian View of Apple“) came via Darrell Etherington on the Washington Post, that poked a hole quite nicely in the majority of these fears. Most notably was Etherington’s assertion that Tim Cook should be considered to be on par with Steve Jobs in terms of innovation, the only difference being that Jobs’s successor has a bit better grasp on supply chain creativity than product design.

Interestingly, another former Apple Inc. (NASDAQ:AAPL) CEO was recently on CNBC discussing the state of the company’s shares, John Sculley. Sculley was originally made chairman of Apple in 1983, and between 1985 and 1993, he managed day-to-day operations while Steve Jobs was away at NeXT. On the current situation Apple is in, Sculley had this to say:

“I think they’re going through a very significant change now in terms of product cycles. Traditionally Apple introduces products once a year; now it’s really introducing products twice a year. The complexity of that from a supply chain is immense, and Apple seems to be doing it well. So, I think that people are underestimating just how well Apple is run, and just how successful the company can be when it gets to that twice-a-year product introduction cycle.

Sculley’s comments here seem to agree with the unheralded notion that Tim Cook is a supply chain wizard; on the subject of Apple Inc. (NASDAQ:AAPL)’s valuation, the former Cupertino CEO said that “the question is: does it still deserve a Steve Jobs premium?” to which he paraphrastically answers ‘yes,’ due to the fact that Cook has a clear product leader in Jony Ive.

When looking at the numbers ourselves, we can’t help but notice that the stock’s recent selloff may have shaved off most of that so-called ‘Steve Jobs premium,’ making now a great time to get in if you hold the same conviction as Sculley does. Between 2006 and 2010, AAPL shares traded at an average of 25.7 times trailing twelve month earnings, at a premium of 64% above the S&P. At its present price in the $586 range, however, the stock currently sports an earnings multiple of 13.3X, or a near-10% discount to the broader market averages.

Page 1 of 2

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!