Apple: Still A Bargain At $700!
Daniel is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Last month, on Aug. 23, I predicted Apple's (NASDAQ: AAPL) post-iPhone 5 launch P/E, at that day's price of $650 per share, to fall to 10 (Apple's Post iPhone 5 Launch P/E: 10?) if share prices didn't appreciate by fiscal Q2 2013. Obviously, this meant that Apple shares were drastically undervalued at that time. But even at $700 per share, I still see the shares as undervalued. Why?
Evidence, catalysts, and opportunity
Within 24 hours after iPhone 5 pre-orders began, Apple saw over 2 million pre-orders, versus 1 million pre-orders for the iPhone 4S during the first 24 hours.
Google Trends for the iPhone 5 point to more than twice as much interest for the iPhone 5 as there was for the iPhone 4S. The search term, "iPhone 5" is currently being searched for more than twice as often as "iPhone 4S" was at its peak. But what's interesting is that the "iPhone 5" search phrase hasn't even peaked yet!
After this weekend, Apple will probably give us their opening weekend sales numbers (likely 5 million units or more), which are likely to be representative of yet another mind-blowing launch. Analysts will then scramble to raise their price targets and iPhone 5 unit sales estimates (they already are). This, of course, will result in heavy investment of many sheep-like mutual funds to the tune of billions of dollars, raising the share price even further.
There is clear speculation of an iPad Mini launch in October. Apple's rumored iPad mini will, no doubt, be a serious threat to the 7" Amazon(NASDAQ: AMZN) Kindle Fire HD and the 7" Google(NASDAQ: GOOG) Nexus. In fact, due to the very well timed launch, the iPad mini could even open up the wallets of many would-be Microsoft (NASDAQ: MSFT) Surface customers during the holiday season.
And of course there is the exploding sales and huge opportunity in Apple's Asia-Pacific region. For a deeper look into this huge driver for Apple in 2013, read my article: Apple Analysts Shift Focus to Asia-Pacific Sales.
The bottom line
There are many possible catalysts for yet another year of mind blowing growth at Apple. But there is no need to stop at potential catalysts. Early numerical evidence, from both preorder numbers and Google Trends, points to a potential double in iPhone 5 unit sales over iPhone 4S unit sales. I continue to believe Apple shares are significantly undervalued, and my money follows my mouth. View disclosure below.
DanielSparks owns shares of Apple. The Motley Fool owns shares of Apple, Amazon.com, Google, and Microsoft. Motley Fool newsletter services recommend Amazon.com, Apple, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
