There is one rule of the market: the price cannot increase indefinitely. From this follows the importance of a critical view of the action the most successful companies, because, as a rule, on the market most excited, and it seems that they will go up infinitely. Experts exchange resource Investcafe wrote about the weaknesses of Apple users that are planning to invest in shares of a U.S. Corporation.
The core of Apple’s success for a long time is the iPhone. If you just look at the dynamics of sales of units of Apple products, the leader is obvious:
If to speak about, then 69% of total revenue Apple provide iPhone sales, and this segment is growing in the structure of total sales. Dangerous enough for the company to rely on just one source of revenue and growth, especially as the projections for this market do not point to a continued boom. According to the International Data Corporation forecasts that in 2015 the growth of the global smartphone market will slow to 2.5% 11.3% compared with 27.6% in 2014. This opinion was shared by Fitch analysts predicting a decline in the share of Apple in the global smartphone market in 2015, up 14% from 15% in 2014. Indirectly, these assumptions are confirmed by statistics on the use of mobile operating systems. Currently, the share of iOS is 20,78% of all mobile OS, although in 2013, Apple held 25%. The smartphone market is highly competitive, but what happens if competitors slowly eat the current share of Apple? For any company important to diversify sources of revenue, but probably in the Apple “think different”.
In my opinion, despite the different key sources of income, the closest in spirit to rival Apple is Google. Both companies have their own ecosystem, which includes the operating system, browser, cloud technologies, various services, such as Maps (about the latest in Apple’s case, a lot of cartoons on the network). Google also tried to create your smartphone, even bought Motorolla, but abandoned this in favor of software development. If you look critically, the smartphone is just “iron”, you can copy it. The ecosystem is much more difficult to copy. Let’s note that no Apple, but Google has. First, there is the very popular search engine, and will be unlikely to have, secondly, there is no social resources, such as YouTube and Google+, thirdly, there is such a wide range of free apps. Thus, using the (in my subjective opinion) developed for today the Google ecosystem, I have the opportunity to choose any smartphone, but buying an iPhone, I turn in a weaker ecosystem without any options.
Now let’s do some calculations. From 2012 to the current period the share price increased by more than 110%, however the average value of the multiplier P/E remained at X15. This can happen if the denominator (earnings per share) also increased by approximately 110%. If you just browse on the dynamics of the annual profit (Net Income) since 2012, we note a decline of 5.36% (from $41,733 billion to $39,510 billion). To achieve growth in the earnings per shares while reducing the net annual profit Apple could exclusively at the expense of the program of redemption of Treasury shares, during which the number of shares with 6,631 billion in 2012 decreased to 5,832 billion in March 2015. In fact, the growth of stock quotes to a considerable extent, was due not to an increase in profitability of the company and repurchase their own securities on the market — like a soap bubble, as it cannot last forever.
The multipliers of the company are in equilibrium relative to major competitors in the industry:
Technical analysis indicates a break of the upward channel in which the stock price has moved since the end of last year. After three unsuccessful attempts to overcome the level of $133 price shows a decline.
Current calculated potential changes in the capitalization of the company determines the recommendation “hold”. However, based on the reflection and the elements of technical analysis, I would advise caution on the opening of additional long positions in the shares of Apple. Nearing statements for the 3rd quarter, and if the iPhone sales will continue explosive growth, a certain downward correction may occur, concluded the experts.