U.S. stocks are higher on Thursday, with the and the broader S&P 500 up0.21% and0.27%, respectively, at 12:45p.m. EDT. The Nasdaq Composite was up0.37%.
Professor Aswath Damodaran of New York University's Stern School of Business has written the book on valuing common stocks -- four of them, in fact. He is arguably the world's leading authority on the topic, and he's been valuing Apple's stock on a quarterly basis for the past four years. As such, when he posts an updated valuation on his blog, I read it immediately. Furthermore, academic expertise is not his only credential regarding Apple.
Pr. Damodaran invests has been buying and selling Apple shares based on the results of his analysis and has made some prescientcalls on the stock in his blog. For example, on Jan. 27, 2013,with the stock at a split-adjusted price of $63.26, he wrote, "there is a 90% chance the stock is undervalued," and put its value nearly 40% higher, at around $87 (split-adjusted, or $609 per share pre-split). Over the next 24 months, the price of Apple shares would double.
This is his current thinking on the stock's valuation:
At $130, his intrinsic value estimate is in line with the stock's 52-week high ($134.54), which it achieved at the end of April. The stock's 14% decline from that level provides investors with a margin of safety on the shares of a company that is once-in-a-generation:
It's not every day you're handed the opporunity to buy into one of the world's greatest businesses at a discount. Patient, value-driven investors ought to seriously consider opening a position (or adding to their existing one) at current prices. I expect those who follow through will be able to look back happily at their decision in three to five years' time (and beyond) -- and their returns will hardly be academic.
The article Apple: Finally, a Guru Worth Listening to originally appeared on Fool.com.
Alex Dumortier, CFA, has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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