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 Sculley was originally made chairman of Apple in 1983, and between 1985 and 1993, he managed day-to-day operations while Steve Jobs was away at NeXT.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
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

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 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!