Quoted from rai:
Things like cloud ecosystem is already factored in it’s not selling on current sales it’s selling on future growth hence the high PE
Things like tax cuts are being priced in already notice the surge since the election? That’s business frendly environment being factored in, buy the rumor sell the news.
Not yet. That's also what they said about the iPhone 8 announcement in September, "buy the rumor and sell the news", and the market gave us another gift to buy lower.
Every stock trades on future earnings potential, not 12 months trailing PE. That said Apple, at 19x earnings today is trading at a HUGE discount to the S&P500 at 25.89x today. The median historical average is 14.87x
Now there are many other valuation methods to look at, Price to sales, Price to free cash flow (markets are even more overvalued on that basis) but not Apple which generates mountains of free cash flow, forward PE, dividend adjusted etc.
I used to think tax cuts were already priced into the market at this point, not so much anymore, maybe to some extent.
It's 3%+ GDP growth driven by sensible deregulation and the resulting great earnings. Tax reform will help underpin this but multinational companies like Apple already pay a lower effective tax rate than US only companies like O'Reilly.
What isn't factored in is the "repatriation" of $$$ from overseas at a proposed tax rate of 5%! Wow. That alone drives Apple stock up another $10-15 per share.
The GROWTH of the Services aspect of Apple is why the stock has exploded, its not about future iPhone sales, although selling 85 million X models in the quarter doesn't hurt.
What's also not factored in is what will they BUY with their 250 Billion cash horde? Disney, Netflix? Who knows.
And the one of the biggest factors, they just leapfrogged everybody else on AR (augmented reality).
Plus, what else do they have in the pipeline over the next 3-5 yrs that can't be disclosed that we don't know about. They get the best talent in the world and have the most $$$.
Anyhow, my "buy on the rumor and sell on the news" moment will likely come after the Christmas quarters earning report. It will be a BLOWOUT quarter again and if previous cycles play out on these major upgrade cycles, that will be the time to sell and buy back in later.
When you factor in all of the market valuation methods it is deemed mildly overvalued right now.
If interest rates blow through 2.75% on the 10 yr treasury on up to 3% next year and inflation keeps ticking up, including wage inflation, yes its real, then I'd expect a decent selloff.