January 28, 2015

VALUATION WATCH: Overvalued stocks now make up 53.66% of our stocks assigned a valuation and 14.73% of those equities are calculated to be overvalued by 20% or more.  Eight sectors are calculated to be overvalued--with three at or near double digits.

Kiss the Cook
--Apple Posts Most Profitable Quarter in History

Apple Inc. 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.

There were a lot of questions about Apple's future following the death of founder and CEO Steve Jobs, but replacement Tim Cook did a lot to bury doubts once and for all with the most recent earnings report. Apple posted the greatest profit of any company in history yesterday. The Company posted record quarterly revenue of $74.6 billion and record quarterly net profit of $18 billion, or $3.06 per diluted share. These results compare to revenue of $57.6 billion and net profit of $13.1 billion, or $2.07 per diluted share, in the year-ago quarter. Gross margin was 39.9 percent compared to 37.9 percent in the year-ago quarter. International sales accounted for 65 percent of the quarter’s revenue.

The tech juggernaut's profit of $18 billion dollars handily beat the @ $16 billion prior record posted by Exxon/Mobil back in 2012. The latest iPhones led to the staggering number, with 74.5 MILLION of the devices sold for the quarter. The company's cash reserves now approach $180 BILLION. That's enough cash to buy major competitors outright--if they wanted.

Buyers purchased large quantities of the bigger, more expensive, and more profitable iPhone 6 Plus, and that really boosted the company's bottom line. Sales of iPads were less impressive, but that didn't matter due to the huge demand for the latest iPhone models during the Christmas season. Analysts note that the phones were also wildly popular in China, a fact which bodes well for the future. Since the death of Steve Jobs, Cook has essentially increased quarterly profits 300%. He has also helped the company by getting rid of management figures who were apostles of Jobs, but perhaps not as effective as they should have been.

ValuEngine continues its BUY recommendation on APPLE INC for 2015-01-27. Based on the information we have gathered and our resulting research, we feel that APPLE INC has the probability to OUTPERFORM average market performance for the next year. The company exhibits ATTRACTIVE Company Size and Sharpe Ratio.

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Below is today's data on AAPL:

ValuEngine Forecast
	Target Price*	Expected Return
1-Month	109.72	0.53%
3-Month	110.67	1.40%
6-Month	111.86	2.49%
1-Year	116.14	6.42%
2-Year	132.18	21.11%
3-Year	69.42	-36.39%

Valuation & Rankings
Valuation	8.21% overvalued	Valuation Rank(?)	32
1-M Forecast Return	0.53%	1-M Forecast Return Rank	86
12-M Return	38.78%	Momentum Rank(?)	89
Sharpe Ratio	1.04	Sharpe Ratio Rank(?)	96
5-Y Avg Annual Return	25.98%	5-Y Avg Annual Rtn Rank	93
Volatility	25.02%	Volatility Rank(?)	72
Expected EPS Growth	17.53%	EPS Growth Rank(?)	52
Market Cap (billions)	640.09	Size Rank	100
Trailing P/E Ratio	15.68	Trailing P/E Rank(?)	73
Forward P/E Ratio	13.34	Forward P/E Ratio Rank	67
PEG Ratio	0.89	PEG Ratio Rank	47
Price/Sales	3.50	Price/Sales Rank(?)	27
Market/Book	6.23	Market/Book Rank(?)	20
Beta	0.89	Beta Rank	58
Alpha	0.22	Alpha Rank	88

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