WE ALL LOVE AAPL, RIGHT ?
But don't overestimate the returns on the stock
AAPL is no longer a high-growth stock
- organic growth is only around +7% per annum
- and it relies upon Stock Buybacks and Dividends for investor returns
LET'S TAKE A LOOK
But don't overestimate the returns on the stock
AAPL is no longer a high-growth stock
- organic growth is only around +7% per annum
- and it relies upon Stock Buybacks and Dividends for investor returns
LET'S TAKE A LOOK
RECENT PERFORMANCE - AAPL
COVID Trough was around $55
Current level is around $132
--> 2.4x return
COVID Trough was around $55
Current level is around $132
--> 2.4x return
RECENT PERFORMANCE - TSLA
COVID Trough was around $80
Current level is around $680
--> 8.5x return
WHICH ONE WOULD YOU RATHER HAVE OWNED ?
COVID Trough was around $80
Current level is around $680
--> 8.5x return
WHICH ONE WOULD YOU RATHER HAVE OWNED ?
ORGANIC GROWTH - AAPL
Revenue growth : +7% per annum
--> 2.0x over 10 years to 2031
Revenue growth : +7% per annum
--> 2.0x over 10 years to 2031
ORGANIC GROWTH - TSLA
Unit Volume growth : 0.5 million --> 25.0 million
--> 50x over 10 years to 2031
Unit Volume growth : 0.5 million --> 25.0 million
--> 50x over 10 years to 2031
TOTAL RETURN - AAPL
Revenue growth : +7% per annum
Stock Buybacks : +5.5% per annum
Dividend Yield : +0.65% per annum
Total = +13.15% per annum
--> 3.44x over 10 years to 2031
Revenue growth : +7% per annum
Stock Buybacks : +5.5% per annum
Dividend Yield : +0.65% per annum
Total = +13.15% per annum
--> 3.44x over 10 years to 2031
This means that AAPL does not pass our 15% investment hurdle rate and its discounted future value would be steadily declining when viewed from the present
TOTAL RETURN - TSLA
$680 today
$5,300 in 2031
--> 7.8x return over 10 years to 2031
= +22.8% per annum CAGR
WHICH ONE WOULD YOU PREFER TO OWN TODAY ?
$680 today
$5,300 in 2031
--> 7.8x return over 10 years to 2031
= +22.8% per annum CAGR
WHICH ONE WOULD YOU PREFER TO OWN TODAY ?
VALUATION RISK - AAPL
AAPL is trading at a P/E Multiple of 35.2x today
As its maturity and declining growth become better recognized, this should trend down closer to 20x compatible with a normal market
AAPL is trading at a P/E Multiple of 35.2x today
As its maturity and declining growth become better recognized, this should trend down closer to 20x compatible with a normal market
VALUATION RISK - AAPL continued
AAPL's P/E Multiple declining from 35.2x down to 20x will cut its future stock price
$132 at +13.15% per annum --> $454 in 2031
$454 x 20/35.2 = $258 per share
--> 1.95x return over 10 years to 2031
= +6.9% per annum CAGR
+0.65% for Dividends
AAPL's P/E Multiple declining from 35.2x down to 20x will cut its future stock price
$132 at +13.15% per annum --> $454 in 2031
$454 x 20/35.2 = $258 per share
--> 1.95x return over 10 years to 2031
= +6.9% per annum CAGR
+0.65% for Dividends
VALUATION RISK - TSLA
TSLA is trading at a P/E Multiple of 10.4x today
Our 2031 Valuation has priced it at 20x compatible with a normal market
- so the Valuation Risk has already been normalized into the future stock price numbers
TSLA is trading at a P/E Multiple of 10.4x today
Our 2031 Valuation has priced it at 20x compatible with a normal market
- so the Valuation Risk has already been normalized into the future stock price numbers
WHICH ONE WOULD YOU PREFER TO OWN TODAY ?
On an "apples-to-apples" valuation basis :
AAPL = 1.95x over 10 years to 2031
--> +6.9% per annum CAGR and 7.65 with Dividends
TSLA = 7.8x over 10 years to 2031
--> +22.8% per annum CAGR without counting potential Dividends
COMPARE
On an "apples-to-apples" valuation basis :
AAPL = 1.95x over 10 years to 2031
--> +6.9% per annum CAGR and 7.65 with Dividends
TSLA = 7.8x over 10 years to 2031
--> +22.8% per annum CAGR without counting potential Dividends
COMPARE
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