u/wisesheets 5.0 2 ideas

Assuming 7% annual revenue growth and a conservative 6x terminal P/S multiple, AAPL's projected future share price in 5 years is $249.70. Discounting this future value back to today at a 10% required rate of return yields an intrinsic value of $155.04. Applying a 30% margin of safety results in a buy price of $108.53, suggesting the stock is currently overvalued and should only be bought if it gets significantly cheaper. AAPL could achieve higher than 7% growth, or the market may continue to assign it a premium P/S multiple well above 6x.

The author has recently added Microsoft to their holdings and notes that the company's EPV-to-MIVoG ratio is 40%. The author states that a 40% ratio has "historically yielded great returns" according to the model's framework, implying that the market's growth expectations for Microsoft are reasonable or pessimistic, creating an attractive entry point. Microsoft is presented as a long-term investment opportunity because its current valuation, when analyzed through the "Value of Growth" model, suggests that the level of growth priced in by the market is historically associated with strong future performance. The historical correlation between a 40% ratio and great returns may not hold in the future. A slowdown in Microsoft's key growth drivers (e.g., cloud computing, AI) or a broader market downturn could lead to underperformance, regardless of the initial valuation. The model's inputs (e.g., normalized NOPAT) are subject to interpretation and could be miscalculated.