One score and 14 years ago, two passing souls who met on a NYC subway train married, settled down in a Queens apartment, and brought their newborn son home from the hospital.
That baby boy had no clue he would one day type away on the internet with his thoughts about money, markets, and – elsewhere than this column – his Maker.
My journey as a writer began early, though not always well.
My first bit of writing was on a VTech children’s laptop at age 6. From the rented upstairs of our Brooklyn home, I aimed to investigate the local crime on our block.
Three shops had been robbed at gunpoint in three weeks’ time. The cops, according to the newsman on TV, didn’t have any leads. But my 6-year-old brain thought I could write down the clues and solve the mystery.
It was a failed attempt. But it sparked my love for writing.
Years passed before I tried again. In middle school, I sought to write a book on space travel, robots, and the meaning of life.
Yes, this was in middle school. No, I knew almost nothing about such deep topics.
But that didn’t stop me. I wrote a preface and two chapters, then never touched the project again. (Cartoons were a bit of a distraction in those days.)
Everything changed in my teen years.
In high school, I found a book in the library that would change my life forever: the first part of Thomas Aquinas’ Summa Theologica.
It was my first time seeing the power of pure logic and argument at work. It grabbed my mind in a way that, to this day, I haven’t forgotten. I was baptized in that moment, in that library, into the life of an intellectual.
From that point forward, I wanted to think deeply, write slowly, and answer all of life’s most pressing questions.
Philosophy became a way of life for me, not just an academic subject. It shaped how I saw and approached the world.
Now, you’re likely thinking, “That’s all well and good… but what’s this have to do with this column?”
The connection is deeper than you might expect.
This column isn’t only a space to pick apart stocks. It’s also meant to reveal the biases we all carry when seeking rewards and avoiding risks.
Just as philosophy taught me to do, The Value Meter strips emotions away and uses a logical approach to a key question: Why?
Why should I buy – or not buy – this stock right now?
Today’s company is a perfect example of why this matters. It’s a very popular company – you’ll know it well. It has an almost magnetic appeal to most investors’ hearts.
But here’s the question we must focus on: Should investors be drawn to it at all?
The company I’m talking about is Apple (Nasdaq: AAPL).
The Most Beloved Company in the World
It’s a popular myth that Apple is a technology company. It’s not. It’s a lifestyle brand that has created something every business dreams of: a passionate following among customers who become evangelists for the brand.
When someone buys their first iPhone, they often end up buying an Apple Watch, AirPods, maybe a MacBook… and before they know it, they’re paying for services throughout Apple’s entire ecosystem. There’s probably an Apple product within arm’s reach of you right now.
Apple’s second quarter results show a company that’s still printing money, even if the pace has slowed. Total revenue came in at $95.4 billion, up 5% from the second quarter of last year. The iPhone alone brought in $46.8 billion, up a modest 2%.
But the real story is Apple’s Services segment, which includes recurring revenue streams like the App Store, iCloud, and subscriptions. It generated $26.6 billion – a 12% increase year over year and an all-time record. That accounted for 27.9% of the company’s total revenue, up from 26.3% in the same quarter last year.
This is the kind of predictable income that makes investors fall in love.
The Stock’s Wild Ride
Apple’s stock tells a story, too.
Shares climbed steadily through 2024, reaching peaks above $250 by early 2025. But then something interesting happened: Despite solid financial results, the stock gave back much of those gains.
That climb above $250 looks almost parabolic in hindsight – the kind of move that often signals investor euphoria rather than rational valuation.
The market seems to be grappling with the same question we’re asking: At what price does even the world’s best company become too expensive?
To answer that, we need to strip away the emotional attachment and focus on the cold, hard facts.
So let’s see what The Value Meter reveals about this most beloved of companies.
The Value Meter Verdict
When we apply our three-metric framework to Apple, something fascinating emerges.
Yes, Apple trades at a premium. The company’s enterprise value-to-net asset value ratio sits at 44.35, well above the peer average of 12.31. At first glance, this screams “expensive.”
But here’s where the beauty of cash flow analysis shines through. Apple’s average free cash flow-to-net asset value ratio comes in at 37.87% over the past four quarters. Compare that with the peer average of just 8.33%, and suddenly that premium starts to make sense.
Apple isn’t just expensive – it’s expensive for a reason. The company generates cash over four times more efficiently than its peers. When you’re paying a premium for a money-printing machine that actually prints more money than anyone else, the math changes entirely.
The consistency factor seals the deal. Apple has delivered positive free cash flow in each of the past four quarters. No hiccups, no surprises, just steady cash generation quarter after quarter.
Even at these elevated valuations, the company’s cash generation prowess suggests there’s still value to be found. For investors who are willing to pay a premium for quality and consistency, Apple offers exactly that.
The Value Meter rates Apple as “Slightly Undervalued.”
What stock would you like me to run through The Value Meter next? Post the ticker symbol(s) in the comments section below.
The post The World’s Greatest Company Looks Expensive… but Is It? appeared first on Wealthy Retirement.