Apple

Everybody still loves Apple(AAPL) and many say the shares are still undervalued. I thought I would run a quick DCF and see what kind of share price I can come up with:

I did a simple sensitivity analysis just to see what inputs would give me a reasonable margin of safety...unfortunately those inputs were far beyond what is reasonable for a company (even a tech company). 25% FCF growth with a 10% annual decay is very generous compared to other companies I have analyzed. Typically I have never gone above 15% FCF growth with a 10% decay.  I did with Apple and still had a negative margin of safety.

This is not to say that Apple is not a great company.  It has phenomenal branding, products, marketing, management etc... I would not be surprised to see the stock perform strongly into the future regardless of a DCF valuation.  However, I would rather invest my money where there is a clear divergence between stock price and underlying fundamental performance rather than a convergence.