By Steve Hach.
VALUATION WATCH: Our models find that overvaluation is at levels typically seen when market pullbacks occur. Overvalued stocks assigned a valuation now make up almost 78% of our universe and 44% of the stocks assigned a valuation are calculated to be overvalued by 20% or more. 15 of 16 sectors are calculated to be overvalued–14 of them by double digits.
Apple Harvest
–Apple Announces New iPhone Models, ValuEngine Still Rates Stock a Hold
Apple Inc. (AAPL) is engaged in designing, manufacturing and marketing mobile communication and media devices, personal computers, and portable digital music players. The Company’s products and services include iPhone, iPad, Mac, iPod, Apple TV, a portfolio of consumer and professional software applications, the iOS and Mac OS X operating systems, iCloud, and a range of accessory, service and support offerings. It sells its products worldwide through its online stores, its retail stores, its direct sales force, third-party wholesalers, and resellers. Apple Inc. is headquartered in Cupertino, California.
Apple held another one of their product announcement conferences yesterday. Fanboys rejoiced at the news of two new iPhone models, the iPhone 5s and iPhone 5c. As is typical, the new models feature better processors, battery life, and some cosmetic changes. Probably the most notable news from the latest product announcement is that the iPhone 5c is NOT the “cheap iPhone” many tech analysts predicted. Indeed, the iPhone 5c, which features a machined (not molded) plastic case, is going to be much cheaper to manufacture, but it will not be sold at much of a discount vs the iPhone 5s (@ $100 less). Production will also be faster, allowing the company a better chance of meeting the expected high demand for the device. Thus, Apple will keep margins high on these coveted devices and be better able to strike while the market is hot. Wall St seems rather non-plussed at the news and the stock is currently down almost 5% on the day and several large banks have downgraded the stock.
ValuEngine continues its HOLD recommendation on APPLE INC for 2013-09-10. Based on the information we have gathered and our resulting research, we feel that APPLE INC has the probability to ROUGHLY MATCH average market performance for the next year. The company exhibits ATTRACTIVE Company Size but UNATTRACTIVE Momentum.
Below is today’s data on AAPL:
| ValuEngine Forecast | ||
|---|---|---|
| Target Price* | Expected Return | |
| 1-Month | 495.69 | 0.21% |
| 3-Month | 500.72 | 1.23% |
| 6-Month | 502.74 | 1.64% |
| 1-Year | 507.22 | 2.54% |
| 2-Year | 574.31 | 16.11% |
| 3-Year | 600.43 | 21.39% |
| Valuation | 9.53% overvalued | Valuation Rank | 61 |
| 1-M Forecast Return | 0.21% | 1-M Forecast Return Rank | 72 |
| 12-M Return | -25.36% | Momentum Rank | 18 |
| Sharpe Ratio | 0.63 | Sharpe Ratio Rank | 95 |
| 5-Y Avg Annual Return | 20.93% | 5-Y Avg Annual Rtn Rank | 93 |
| Volatility | 33.29% | Volatility Rank | 72 |
| Expected EPS Growth | 7.39% | EPS Growth Rank | 31 |
| Market Cap (billions) | 464.29 | Size Rank | 100 |
| Trailing P/E Ratio | 12.57 | Trailing P/E Rank | 85 |
| Forward P/E Ratio | 11.7 | Forward P/E Ratio Rank | 77 |
| PEG Ratio | 1.7 | PEG Ratio Rank | 22 |
| Price/Sales | 2.74 | Price/Sales Rank | 33 |
| Market/Book | 3.95 | Market/Book Rank | 29 |
| Beta | 0.97 | Beta Rank | 58 |
| Alpha | -0.5 | Alpha Rank | 16 |
Market Overview
| Summary of VE Stock Universe | |
|---|---|
| Stocks Undervalued | 22.32% |
| Stocks Overvalued | 77.68% |
| Stocks Undervalued by 20% | 9.05% |
| Stocks Overvalued by 20% | 44.23% |
Sector Overview
| Sector | Change | MTD | YTD | Valuation | Last 12-MReturn | P/E Ratio |
|---|---|---|---|---|---|---|
| Aerospace | 1.00% | 3.50% | 30.49% | 22.75% overvalued | 35.26% | 18.49 |
| Auto-Tires-Trucks | 0.66% | 5.70% | 47.81% | 30.66% overvalued | 46.48% | 20.65 |
| Basic Materials | -0.09% | 3.31% | 5.19% | 2.01% undervalued | -24.33% | 19.62 |
| Business Services | 0.74% | 3.86% | 24.03% | 19.53% overvalued | 24.22% | 23.66 |
| Computer and Technology | 0.91% | 5.55% | 32.13% | 24.93% overvalued | 24.14% | 30.65 |
| Construction | 0.46% | 4.04% | 25.88% | 15.50% overvalued | 29.05% | 25.24 |
| Consumer Discretionary | 0.54% | 3.11% | 32.51% | 22.06% overvalued | 28.71% | 25.19 |
| Consumer Staples | 0.47% | 2.38% | 16.87% | 15.92% overvalued | 17.10% | 23.04 |
| Finance | 0.55% | 3.05% | 24.96% | 17.31% overvalued | 14.12% | 17.25 |
| Industrial Products | 0.96% | 4.10% | 29.18% | 20.69% overvalued | 28.33% | 22.51 |
| Medical | 0.38% | 2.37% | 36.11% | 21.29% overvalued | 23.71% | 25.43 |
| Multi-Sector Conglomerates | 0.99% | 5.17% | 9.30% | 21.12% overvalued | 17.24% | 17.58 |
| Oils-Energy | 0.27% | 3.94% | 23.27% | 7.58% overvalued | 6.02% | 26.73 |
| Retail-Wholesale | 1.11% | 4.03% | 34.04% | 22.25% overvalued | 32.51% | 23.59 |
| Transportation | 1.05% | 5.83% | 25.51% | 24.02% overvalued | 29.17% | 18.75 |
| Utilities | 0.88% | 2.40% | 11.47% | 7.36% overvalued | 6.73% | 19.25 |
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
