The stock is up 330% since its 2008 low, but that's really nothing to write home about
In an article posted Friday on Seeking Alpha, Fortune.com contributor Andy Zaky takes aim at a phrase that has attached itself to Apple (AAPL) recently: "the darling of Wall Street." (Google it; you'll be surprised how often it pops up in the financial press.)
Apple is a darling, the thinking goes, because the stock has risen more than 330% from $80.49, the low it hit on Nov. 20, 2008, in the middle of the subprime mortgage crisis.
But as Zaky points out, Apple had no business trading for $80 a share in a quarter in which its earnings grew 155%. Moreover, that breakneck growth has hardly slowed. Over the past five quarters, Apple's EPS grew 86.0%, 74.6%, 67.5%, 75.2% and 92.2%, respectively.
Yet the stock has been going nowhere since October. It closed at $346.57 Thursday, up only 8.6% in seven months. The NASDAQ-100 (QQQ), by contrast, has rallied 18.22% over the same time period. Even the broader S&P 500 (SPY) has outperformed Apple, posting 16.2% gains since October.
Apple's price to earnings ratio -- the value of the stock as measured by Wall Street -- has actually been shrinking, as Zaky's chart shows. Is that how the Street rewards its "darling"?
" What's next?" he asks. "A janitor living in Manhattan is called rich because he received a 5% pay raise increasing his salary to $20,000 a year?"
Someone sold 6 million shares at $348.24 as Apple put the NASDAQ-100 rebalance behind it
Apple investors had been dreading Friday's close since early April, when NASDAQ announced that starting May 2, Apple's share of the NASDAQ-100, one of the world's most heavily traded stock indexes, would be reduced from 20.5% to 12.3%.
All 100 stocks in the index were to be affected by the so-called Special Rebalance, but none as much MOREPhilip Elmer-DeWitt - May 1, 2011 7:39 AM ET
Apple (AAPL) set a new all-time intraday high Thursday, hitting $320.18 shortly after 11:00 a.m. EDT, up $7.38 (2.4%) from Wednesday's close.
Apple closed at $318.27, up $5.47 for the day.
The stock's latest run-up seems driven more by the broader market than by any news out of the company -- although a rising tide tends to lift Apple's stock more than most these days. After a string of record-breaking quarters, Apple MOREPhilip Elmer-DeWitt - Nov 4, 2010 12:22 PM ET
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