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Is Apple Running out of Juice?

LONDON April 24, 2012

CMC Markets provides an analysis

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http://photos.prnewswire.com/prnh/20120424/527146

Colin Cieszynski http://www.cmcmarkets.co.uk/ Canada Fundamental and technical indicators have been sending conflicting signals about whether Apple is in a bubble November 25 th April 9 th , Apple shares gained 74.9%. Over the same time frame, the Dow Industrials went up 15.1%. The company also has blasted through the high end of a channel and the chart has gone parabolic or nearly vertical. T echnically this suggests that Apple is probably in a bubble and vulnerable. In contrast, fundamental indicators suggest that the stock could still have room to run for a while.

These indicators include:

  • Apple’s current Price to Earnings (P/E) Ratio has climbed up toward 18 but still remains low relative to most of the last decade.

  • Companies with a higher growth rate can support a higher P/E ratio. With 1 being considered average for the PEG ratio and 2-3 sending out warning signals, Apple’s current 0.3 ratio suggests considerable upside remains possible.

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       Table one                Weight in     Date       NDAQ 100     P/E       12/31/01   0.90%     12/31/02   0.90%       43.4     12/31/03   90.00%     101.7     12/31/04   0.90%      863.6     12/31/05   6.00%       46.3     12/31/06   6.70%       37.3     12/31/07   6.70%       50.4     12/31/08   9.80%       12.5     12/31/09   15.40%      23.2     12/31/10   20.00%      21.2     12/31/11   15.00%      14.6     04/05/2012 19.40%      18 

Source: Bloomberg, CMC Markets

Table two

               EPS    Growth PEG     09/30/05   1.56     09/30/06   2.28  46.15% 0.52     09/30/07   3.92  71.93% 0.69     09/30/08   6.77  72.70% 0.37     09/30/09   9.07  33.97% 0.35     09/30/10  15.15  67.03% 0.26     09/30/11  27.67  82.64% 0.25     09/30/12F 44.03  59.13% 0.30     09/30/13F 50.42  14.51% 

Source: Bloomberg, CMC Markets

Notes to Editors

http://www.cmcmarkets.co.uk/ Peter Cruddas

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CMC Markets UK Plc and CMC Spreadbet Plc (collectively known as CMC Markets) are authorised and regulated in the UK by the Financial Services Authority.

http://www.cmcmarkets.co.uk/

The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

SOURCE CMC Markets

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