I have done a three stage DCF valuation with these assumptions:
- 12% profit growth for the next 5 years, 6% for years 5-10 and 2% thereafter
- using the Capital asset pricing model, I arrived at a discount rate of 8.2%
I don't think I need to introduce Apple, it's one the most famous brands in the world. It produces iPads, iPods, Mac computers and of course the iPhone. It was founded in 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne. The company almost went bankrupt after the burst of the dotcom bubble in 2000s. With the introduction of iPhone, Apple quickly rebounded and became the giant it is today. Valuation I have done a three stage DCF valuation with these assumptions: - 12% profit growth for the next 5 years, 6% for years 5-10 and 2% thereafter - using the Capital asset pricing model, I arrived at a discount rate of 8.2% As you can see, Apple is still undervalued with current growth assumptions. Even more so, if it comes up with a new blockbuster products. I believe I used conservative estimates to derive AAPL value, and there is still at least a 31% margin of safety. Hedge funds obviously realize this, and investors like Carl Icahn, Joel Greenblatt, David Einhorn and Daniel Loeb hold large positions in the stock.
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To make money in stocks you must have the "the vision to see them, the courage to buy them and the patience to hold them". And patience is the rarest of the three. Thomas Phelps Categories
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