Buffett’s Formula shows 79% margin of safety for Apple. Fair Value is $2101.42
Using Warren Buffett’s formula in this online calculator (you can try it too) I plugged in 30% annual growth for just 3 years before leveling off to just 3% growth. I put the 10 year treasury benchmark in at 5% which is way over where it is now by 3% to be ultra conservative here. Trailing earnings are 41.04 and said I was 50% confident these earnings would materialize. A safe bet coming off a 118% and 94% YOY quarterly gains.
Based on Buffett fair value formula Apple would be $2101.42 giving it a margin of safety right now of about 73%.
Try and find any other stock in the market with this right now. Oh yeah..forgot that my margin of safety doesn’t take into account the 110/share in cash. With that the margin of safety is 79%. That is pretty huge!
Sell at your own peril
Here is the calculator if you want to plug in your own values.