Jelly Roll Capital Equity Research

Market Analysis, Education, and Wall Street-Quality Stock Reports

Introducing Stock Briefs and Our Coverage of Apple

This site has been down for several days due to a server change, so updates have been impossible — thank you for your patience with the lack of new content. However, the downtime has given us an opportunity to add one major new feature to the site: our “Stock Briefs” section went online with our first short piece on Apple (ticker: AAPL). Because it takes much less time to assemble a article that will appear in the Briefs section compared to the official Stock Reports, the Briefs section will likely be updated 2-3 times per week, compared to the stock reports section which is updated once approximately every two weeks. Nonetheless, briefs include an abridged discussion of the company’s operations, risks and challenges, and a fair value target derived from our valuation model. As always, you are encouraged to contact us via email at research@valuestockreports.com if you have any questions or comments about our content or have a suggestion about a company you would like to see profiled.

When a new brief is released, additional commentary on the stock will normally appear here. My opinion of Apple is that the stock has been overbought by the late-to-the-party crowd who found the official release of the iPhone to be a good reason to buy a stock that is overly dependent on a late-stage product (the iPod) for not only a considerable fraction of revenues, but also for its image. Although the company is a relative bargain in the field of technology, by absolute valuation metrics the stock appears to be moderately overpriced compared to fair value. Investors waiting for a sufficient margin of safety need to look for a serious correction that would take AAPL down to the mid $60s, and although I believe AAPL is due for a downturn in the near future, I don’t believe the stock would decline much beyond the $75 area before the stock reaches equilibrium around the fair value target of $81.

What does this all mean? I think AAPL is dead money for the time being, with little upside potential due to a lack of catalysts but a reasonable enough valuation that the stock isn’t a screaming short either.