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Testing Apple’s Stock Price: a PE of 15 Says It’s No Better Than an Artificial Knee Manufacturer

By YCHARTS July 17, 2012, 09:58:31 AM EDT

Somewhat annoyingly, Apple ( AAPL ) has become the market's benchmark stock, the one against which all others are compared. But the market is full of other stocks. Surely something else must be out there that looks just as good?

Here's a possibility: Stryker ( SYK ). It's a leading medical tech company, the place you - or rather, your doctor -- might call when you need a new knee or hip.

The iPad maker and the healthcare outfit are trading at about the same multiple of earnings:

AAPL PE Ratio data by YCharts

But when it comes to revenues, there's been no contest:

AAPL Revenue TTM data by YCharts

That helps explain this:

AAPL data by YCharts

So what about risks? With Apple, there's always the possibility that its products will cease being cool. Its next big thing, like a small iPad, could flop. Customers currently flocking to its computer chapels could embrace the anti-technology ethos being drilled into the children of Silicon Valley . It's possible -- not probable, just possible -- that Apple customers could toss their gadgets.

Meanwhile, the risks at Stryker seem less hypothetical. It could have trouble inventing, developing and marketing new products, and it could be stymied by Food and Drug Administration regulators. But more concretely, it may be squeezed by Obamacare and the goal of driving down healthcare costs. In Stryker's latest 10-k, it admits it can't predict the ultimate impact of the law but worries it could be significant. It says the healthcare law would impose a 2.3% excise tax that will apply to a majority of its products.

When the U.S. Supreme Court upheld the law, Stryker investors briefly and inexplicably celebrated, then grew more subdued:

SYK data by YCharts

So in this toss-up between the hipster tech company and the high-tech hip company, the hipsters win. Darn.

From the editors of YCharts. YCharts Pro Investor Service includes professional stock charts , stock ratings and portfolio strategies .




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.


This article appears in: investing, Stocks

Referenced Stocks: AAPL, SYK



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