Is $AAPL overvalued?

There has been much hysteria lately about Apple, and its skyrocketing stock price. Many comparisons have been made to 1999 and the tech bubble. While some current tech IPOs do remind one of the good/bad old days, Apple seems a poster boy for sanity. Indeed, consider the following comparison:

You will see that Apple's valuation is quite reasonable (even more reasonable if you take into account the traditionally conservative forward looking statements), and if you believe that it can maintain its current growth rate, it is actually cheap compared to its tech rivals. Can it? Hard to say, of course, but they appear to have a successful plan, which includes:

• iPhone 5 (coming out either Summer or Fall of this year).
• new generation of (most likely) retina display MacBooks
• a disciplined software strategy which includes the convergence of iOS and OS X
• Apple TV

While all of this is happening, Apple is struggling to meet demand for its existing products. Observations during a recent trip indicate everyone in first class sporting iPhones. It seems clear that everyone in economy wants one (many people have them already), and the iPhone 3GS, from all reports, is a very hot seller (and a money machine for apple, since it costs very little to make). They are about to start making the iPad 2 in Brazil, which will open up the rapidly developing (and tariff protected) Brazilian market to yet another apple money machine (iPad 2, being last year's technology, is extremely profitable).  Apple is also making a lot of money from the very popular Android handsets. So far so good.

Things do not quite look so rosy for the competition. AMZN is operating a fairly mature bookstore business, and its Kindle hardware business is about to be killed by the new iPad, which gives a vastly improved reading experience.

Google's search business is alive and well, but, near as anyone can tell, its many other efforts have produced a string of duds, at least from the business perspective. Android, while popular, generates far more revenue for Apple, Microsoft, and Qualcomm than it does for Google. Google+ has been forced down the throats of the public, which still prefers Facebook by a huge margin. Chrome and YouTube are popular in their spaces, but neither is a big revenue generator. Google seems to lack a coherent strategy -- thank God for search.

Microsoft has an Office money machine, which will continue to crank for quite a while, Windows, and a considerably less lucrative Xbox franchise. Windows and Xbox are being seriously threatened by tablets, and while Windows 8 is an attempt to combat this, it seems to combine the not-quite-ready-for-primetime aspect of Android with the closed programming model, heavily encumbered by compatibility concerns. Not a recipe for wider adoption than the current Office-user user base (I have a Windows laptop just so I can run bloomberg terminal and excel together). Windows phone has been (so far) a failure. No risk of MSFT being the next RIM, but no particularly bright prospects either.

IBM is well-managed and profitable, but not exactly nimble. It is a mature company which seems to have few prospects for (or even interest in) rapid growth. Its R&D is stellar, and it will continue to make money  for the foreseeable future, so I don't think any fund managers will be fired for buying IBM, but it is not clearly a better investment than Apple.

To summarize: I would not be at all surprised to see AAPL hit $800 after the next quarterly report (in less than three weeks),  especially as I think that the new iPad is an unqualified success, and for those not willing to take a naked technology bet, going long AAPL and short GOOG and AMZN would seem to be a wise strategy (as it has been for quite a while).