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Apple’s Impossibly Good QuarterApple has been performing amazingly well for years. They keep producing blockbuster hits over and over. Not only are these hits enormously popular they are enormously profitable. The only real objections to Apple’s stock I can see are: the overall market value is so huge it just has to collapse (over $ 400 billion – the largest in the world) or it has to be time for a huge reversal of fortunes. The problem with the view that it will fall is that the stock is very cheap by any rational measure. You are not paying much for all the earnings. Even if Apple does not continue the trend of the last 5 years, if it just stopped growing altogether, it is still cheap (if it does continue that trend it will break $ 1 trillion by 2014 – but I don’t think it will). The biggest risk is the profit margin shrinks drastically. That is possible. It is even somewhat likely to shrink a fair amount. But there isn’t much reason to think revenues will not grow. And to me, the current price makes sense only if revenues fall and profit margins fall. It takes the worst case scenario to make this stock seem overpriced. The data on the last quarter (and for 2011 overall) are impossible (except they actually happened).
You can’t grow quarterly sales from $ 26.7 billion to $ 46.3 billion. $ 26 million to $ 46 million, fine that is possible, billions however – not possible. Except Apple did. You can’t grow a $ 6 billion quarterly profit to $ 13 billion in 1 year. Except Apple did. You can’t generate a cash flow of $ 17.5 billion in a quarter. Except Apple did. You can’t have a stockpile of $ 100 billion in cash. Except Apple does. These figure would not have been seen as unlikely just 3 years ago. They were impossible. But Apple achieved them. These figures are not short term blips. They are the latest in a long stream of amazingly results. Related: How Apple Can Grow from $ 200 Billion to $ 300 Billion In Market Cap – Apple Tops Google (August 2008) Apple has numerous, incredibly strong businesses. Each could be the linchpin of an extremely valuable company.
Potentially huge business: Apple TV and ebook sales. It is hard to see how they could have serious stumbles in numerous of these extremely profitable businesses all at the same time. Some more interesting figures:
I do strongly believe Apple should pay a sizable regular dividend (at least 1.5%). But I don’t know if the odds are great that they will. One risk is they blow the money in foolish ways. When you $ 100 billion and generate over $ 3 billion more each month it is hard to appreciate that risking a few billion here and a few billion there really matters. For each business there is risk and certainly possibilities of slower growth, decline and profit margin contraction. The stock is priced for quite a bit of earnings decline. And has been for awhile. I understand the reluctance to buy a company that has a market cap over $ 400 billion. But when you look at the finances and contemplate the future it is hard to see how the stock is not cheap. There are risks. There are risks with every stock and risks to the future profitability of every company. Having so many extremely strong, extremely profitable business puts Apple in a great position. It is hard to see how they can come up with another business line that can make a difference to the profits of a $ 400 billion company. But the stock price isn’t expecting that. It isn’t expecting growth in revenue. It isn’t expecting growth in profits. From where I sit the potential for Apple from the current price (PE of 13) is much greater than the risk. And even with a 8% increase today is cheaper than yesterday (the news is so impossibly great that 8% doesn’t capture the value of that news). I own Apple stock, but not enough. My sleepwell portfolio includes Apple stock. I was smart enough to finally buy it after waiting for years thinking the price wasn’t good enough. Related: Intel Reports Their Best Quarter Ever (July 2010) – Google up 13% on Great Earnings Announcement – Amazon Soars on Good Earnings and Projected Sales – Leadership quotes from Steve Jobs 730 Credit Score Is Good, But Not Excellent In 2012Is 730 a good credit score? Yes but it’s not “excellent” as many of the self-proclaimed “leading” credit card websites claim. Sorry to burst your bubble, but if you have a 730 credit score you are not in the “excellent” category like this top ranking credit card site claims: In fact, I can’t remember any [...] Curious Cat Investing, Economics and Personal Finance Carnival #23Welcome to the Curious Cat Investing, Economics and Personal Finance Carnival: find useful recent personal finance, investing and economics blog posts and articles. The carnival is published twice each month. This carnival is different than others in two significant ways. First, I select posts from the blogs I read (instead of just posting those that submit to the carnival). I think this provides readers a better selection of valuable material (many of the best blogs don’t take time to submit to carnivals). And second, I include articles when I think they are interesting. I figure the primary purpose is to provide links to good recent content, so just because something isn’t a blog post doesn’t exclude it from inclusion.
If you would like to be considered for guest hosting a future edition of the carnival please make a comment including a link to your blog. I will be selective in what blogs I have guest host. My management blog has been hosting a carnival for years now. Related: 2011 annual management blog roundup Merchants Tire Credit Card: Is It Worth The Hassle?A couple years ago on the forum, there was a man who had a Merchant’s Tire credit card account. Even though he lived in Virginia, his soon to be ex-wife allegedly raked up $ 1,500 in charges on his account in a totally different state, Florida. How did that happen? Well according to him, she allegedly [...] Costs Flying Sky high While Others Nearly Plummet![]() One way of measuring inflation is to gauge how prices for an assortment of goods and services have varied over time. Another approach involves looking at changes in how much things cost relative to what the average worker earns (the flaw with this latter method, of course, is that those who don’t have jobs may find that many, if not most, of the things they might want or need to buy are unaffordable).
![]() In searching for airline tickets over the last six months for an upcoming family vacation to Italy I have seen the broad impact of fuel costs on ticket prices since a trip two years ago. Obviously, ticket prices move on hundreds of factors but the most influential input is the cost of jet fuel. In the last decade jet fuel cost per gallon is up 3.5x from 0.87 cents a gallon to 3.01 on average globally last month. Up to 70% of an entire airlines operating budget is fuel costs.
![]() Click image for source and up to date index information.
Be that as it may, if one assumes that data from the Bureau of Labor Statistics is even remotely close to the mark, it would appear that the purchasing power of the average worker has improved over the past 10 years, which is contrary to popular wisdom (see dotted line in the chart below).
There could be any number of reasons why perceptions differ from the reported data. Among other things, the composition of the basket of goods that the BLS uses to construct its index might not be realistic, especially in today’s fast-changing economy. Or maybe the pricing information they rely on doesn’t jibe with consumers’ experience on the ground. Then again, a cynic might note that authorities have an incentive to underestimate inflation and overestimate wage growth for pollitical gain.
Regardless, I thought it interesting to highlight those categories that have become the least and most affordable for the average worker over the past decade. Not surprisingly, gasoline and other energy-related products are a lot more expensive in relative (and absolute) terms than they used to be, which goes some way towards explaining the heightened demand for fuel efficient cars and why people are driving fewer miles than they used to. In contrast, it’s easy to see why sales of flat screen TVs and other modern gadgets have jumped — the products are much more affordable than they used to be.
Looking at GDP Growth Per Capita for Selected Countries from 1970 to 2010I decided to take a look at some historical economic data to see if some of my beliefs were accurate (largely about how well Singapore has done) and learn a bit more while I was at it. GDP in USD for countries
I just picked countries that interested me and seemed worth looking at. I looked for some around the starting position of Singapore and close to Singapore geographically. And looked at Panama as the closest match to Singapore (for Singapore’s main 1970 asset, convenient for shipping lanes, and very close for GDP per capita). Malaysia and Singapore were 1 country after independence (from 1963-1965). I can’t imagine more than a couple countries could reasonably be argued to have had better economic performance from 1970 to 2010 than Singapore (Korea? China? Who else?). Singapore had very little going for it in 1970. They had a good location for shipping and that is about it macro-economically. No natural resources. No huge storage of wealth. No preeminence in science, technology or business. It seems to me that Singapore actually did have 1 other thing. A government that was to preside over a fantastic economic growth success. You won’t find many textbooks talking about the way to economic success is a very well run government. And there is good reason for that, I believe. Relying on a very well run government will nearly always fail. In some ways Singapore was like Japan but with significantly more government influence on the way economic development played out. I was surprised how poorly the USA has faired. It isn’t so surprising that we lagged. People forget how rich the USA was in 1970. The USA is still very rich but bunched together with lots of other rich countries instead of way out ahead as they were in 1970. And in 1970 the lead was already contracting, for what it had been earlier. But even knowing the relative performance of the USA had lagged, I was surprised by how much it under-performed. I was also surprised with India. I knew they have done poorly but I didn’t realize it had been this poor. The failures to greatly improve infrastructure, education and the stifling effect of their bureaucracy have been causing them great harm. They have been doing some good things in the last 10 years especially but still have a long way to go. Their premier education is actually pretty decent. The problem is the other 90% of the education is often poor and many people (especially women) hardly have any education at all. It is very hard to get ahead when you fail to take advantage of the talents of so many of your people. Related: Singapore and Iskandar Malaysia – Chart of Largest Petroleum Consuming Countries from 1980 to 2010 – Chart of Nuclear Power Production by Country from 1985-2009 – Top Countries For Renewable Energy Capacity
*** many of the 2010 figures are IMF forecasts Credit Cards With No Foreign Transaction Fee?Paying a 3% surcharge when using your credit card internationally? Well that sucks. Here’s how can pay no foreign transaction fees in 2012. Credit card companies charge a 2% to 3% fee because they claim it’s necessary to help cover the costs of the currency conversion. That excuse is a crock! The currency conversion takes [...] MasterCard SecureCode ScamA forum member contacted me about what they suspected to be a fake communication regarding the SecureCode program from MasterCard. So I thought now would be a good time to do a refresher on how scammers use the name of this service to trick people. What is MasterCard SecuredCode? Well if you’re not familiar with [...] |







