Apple Inc., the manufacturer of IPhones, Mac computers, Ipads and various other gadgets and services last week issued a warning about lower expected IPhone sales, predominantly in China which caused Apple's stock to crash by nearly 10%.
So after the fall, is Apple fairly valued? I would say now the company is 10% undervalued. Why? Because it is too early to announce a coming recession in the global economy. I think global GDP will start shrinking somewhere in 2022. Yes, China is decelarating, but the fall in China's GDP growth will be gradual. I forecast China's GDP year on year growth will fall to 3-4 percent in the coming 3-4 years.
Apple, however, still faces an unexploitred niche. Apple's smartphone market share is quite low, actually - around 15.6%. The telecommunication operators are subsidizing IPhone models, so actually some of the models are not that expensive. I forecast that Apple will increase its market share in the smartphone market in the coming years. I used to own an Android smartphone, now I own an IPhone XR with IOS. Actually, IPhones are quite good, Android phones too. But the largest Android phone markers like Samsung and LG have been rasing prices, so the price/quality ratio of IPhones is getting better, although they are still expensive smartphones.
What is more, Apple Inc. is moving into services with the AppStore. Apple Inc. is almost giving away the lowest priced 9.7 Ipads with which you can enter the AppStore and enjoy its benefits. Slowly, but surely Apple's services revenue will increase both as a nominal number and as a share of Apple's sales altogether.
So Apple's stock is trading at 148.26 USD currently. I think Apple's intrinsic value is higher and its stock price will rise by 10-15% from the current levels in the next 1-2 years.
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Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!
Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!
Kind regards,
Petar Posledovich
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