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Battered by nearly a year of off-and-on declines from record highs because of fears of a slowdown in iPhone sales, Apple’s stock now is valued closer to IBM, which has disappointed Wall Street for the past four years with declining revenue, than to Silicon Valley technology pioneers Alphabet and Tesla Motors.
Apple shares have increased 5% in the past two weeks as Wall Street bets the company this month will launch a less expensive iPhone to boost sales in developing countries like China. With US consumers upgrading their smartphones less often, manufacturers have been relying on China for growth.
Shareholders has recently pointed out that Apple’s reliable cash generation, beaten down valuation and its wild card potential for future game-changing products as key reasons for owning it.
By comparison, internet behemoth Alphabet, whose Android mobile platform competes against Apple’s iOS, trades at 20 times expected earnings and 13-year old Tesla Motors trades at 132 times earnings. International Business Machines , which is struggling to expand into a high-growth business like cloud computing, has a P/E of 10.2.
Experts said, a target of 15 times its next 12 months’ expected earnings would put Apple at around $138.
In another hint of improving sentiment, Apple’s stock has recently moved above its 50-day moving average for the first time since December. The stock’s selloff in recent months has boosted Apple’s dividend yield to 2.2% from 1.5% a year ago.