Is Apple Inc. (AAPL) the Best Value in Technology?

Apple is better even in its worst market segment

I disagree with the sentiment that the PC is dead. I do agree, however, that the demand is falling. Hewlett-Packard Company (NYSE:HPQ) is one of Apple’s largest competitors in what might be the weakest segment of the technology arena.

As demand for personal computers continues to decline, Hewlett-Packard Company (NYSE:HPQ) faces the additional challenge of having a commodity product that lacks the “cool” factor of the Mac. Hewlett finds itself positioned with a primary product offering no distinctive advantage over competitors in a shrinking market.

Hewlett’s stock produces a dividend yield of only 2.15% compared to Apple’s 2.59% yield and the business carries a debt-to-equity ratio of 0.84. Apple Inc. (NASDAQ:AAPL) currently has no debt but plans to take on some in order to return about $100 billion to shareholders over the next 4 years.

Looking forward, the consensus estimated annual earnings growth rate for Hewlett-Packard over the next five years is an almost imperceptible 0.8% per year. Yet the stock currently trades at 7.08 times projected 2013 earnings. It is hard to understand how Hewlett-Packard Company (NYSE:HPQ) can be valued at almost seven times its projected earnings growth rate, when Apple Inc. (NASDAQ:AAPL) is valued about 30% below its projected rate of growth.

Final thoughts

When it comes to Research In Motion Ltd (NASDAQ:BBRY) and Hewlett-Packard Company (NYSE:HPQ), Apple appears to offer dramatically superior opportunity for investors due to its broader range of products and exceptional financial condition. It is simply hard to imagine any objective assessment where a serious decision can be made to allocate capital to either of these businesses in preference to Apple.

Google Inc (NASDAQ:GOOG) offers an exceptional future growth opportunity that is even slightly better than that projected for Apple Inc. (NASDAQ:AAPL). However, when consideration is given to the current discrepancy in the valuations of the two businesses, it is hard to make the case that investors are better served owning Google’s stock rather than Apple’s. Google’s current valuation is not unreasonably high; but Apple’s is ridiculously low. It is time to back up the truck on Apple.

Ken McGaha owns shares of Apple. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOG).

The article Is Apple the Best Value in Technology? originally appeared on Fool.com.

Ken is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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