Wednesday, February 27, 2008

Stuff the Mattress

Raising oil prices, crashing housing market, skyrocketing inflation, tightening credit, increasing unemployment, weak dollar....

It is really hard to be bullish in this market, unless you are long oil or the euro. I unfortunately am not.

Apple and Google are trading at unbelievably low forward p/e ratios. Google was trading close to $750 just six months ago and today it closed at $473! Apple was up over 200 not long ago and is now trading around $120. Lets look at the fundamentals and see if this is a good time to buy or if we should go to cash and stuff the mattress. Apples forward p/e is around 19! That is incredibly low for a growth company like apple. Net income has increased from 1.989 billion in 2006 (fiscal year end 9/30) to 3.496 in 2007! That growth is unbelievable. Analysts were projecting a one year target estimate at $250 a share a few months ago. Jobs said yesterday that he believes apple will hit the 10 million iPhones in 2008.

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