The stock market’s rise over the last decade has left a lot of companies with dizzying valuations. But there are still stocks that investors can consider a value, whether it’s their price to earnings multiple or competitive moat making them cheap to hold long term.
The stock market giant
It may seem crazy that one of the most valuable companies in the world is cheap, but that’s exactly what Apple stock is today. Shares trade at roughly 20 times trailing free cash flow, and cash flow has grown for more than a decade, as you can see below.
What’s amazing about Apple is that it has a nearly indestructible business model in smartphones. The iPhone is its core product and commands a premium price while selling hundreds of millions of units per year. Until a better smartphone ecosystem comes along (which I doubt will happen) or a new technology paradigm begins, the company can count on consistent iPhone cash flow. From there, it will continue to expand into new businesses like AirPods, the Apple Watch, and services. As cash flow grows, so will buybacks and dividends that add to shareholder value. That’s why it’s a cheap stock today.
The forgotten tech stock
Intel was once one of the hottest technology stocks in the world. But after effectively missing the mobile revolution, it fell out of favor with investors. Now, a resurgence in the… Continue reading at The Motley Fool