Is Apple a Value or a Growth Stock?

Dear Reader,

At 2.33 market capitalization and Price/Earnings and Price/Sales ratios of  31.39 and 8.49 Apple seems to be more of a growth stock.

That said, as far as technology stocks are concerned, Apple passes for a value stock.

Actually, I think Apple is overvalued. I estimate Apple is worth 1.4 trillion USD in the long-run. Apple's revenue has grown at 5 % on average for the last 5 years, so the last reported five calendar years of Apple's revenue and earnings do not speak of explosive future growth.

However, many other growth stocks are trading at ridiculous Price/Earnings levels of 100 or more and many are not even making profit. Apparently many institutional investors are attracted to Apple' stature and relative mild valuation metrics, a sort of utility in the technology world. The asset management funds, hedge funds and pension funds' money flowing into Apple's stock aided by monetary reserves creation of central banks, which is an euphemism for printing money, helps keep Apple valued at 2.33 trillion USD, which is a staggering sum of money. To put into perspective, this is around 10 % of all goods and services the whole of the USA produces in a year.

That is why, I think Apple is worth 1.4 trillion in the long-run. 

Apple is even distributing a dividend, but to be a value stock, Apple should trade at Price/Earning ratio of 14, for example.

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Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

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Respectfully yours,

Petar Posledovich