Apple is high quality but low growth; current valuation of 37x earnings is too expensive, requiring a drop to ~$240/share to be a buy.

Here we find "cash cow" companies such as Apple, Nvidia and Costco.

Now that we know the complete five-step process, let's take a company like Apple, which was once one of Buffett's stocks, and apply this list and process to it to see when it would be a good buy.

The first question that should be asked is: Are Apple's revenues predictable? Well, if you look at the graph of Apple's long-term revenue, you will see that its revenue has been steadily increasing for two decades.

This makes the company's revenues highly predictable. Therefore, we put a "check" mark on this point. The next question is: At what stage of the business cycle does Apple fall?

Specifically, is it in the capital recovery phase? Well, if we input Apple's data into the tool I designed, it becomes quite clear that it is already in the capital recovery phase.

Since we know that it is in the capital recovery phase, it is safe to conduct a complications analysis on Apple. Now, when I look at Apple, the price-to-earnings ratio is highlighted because the company is working at full capacity to generate profits, and therefore this metric is appropriate.

We can see that as of September 2026, Apple stock is very expensive today, trading at 37 times earnings, whereas in 2022 it was trading at only about 21 times earnings, making it very cheap.

We can go a step further by looking at various multiples of the income statement, cash flow statement and even the balance sheet to confirm that Apple stock is currently overpriced.

The final step is to consider the quality of Apple's work and determine whether we need to adjust the numbers up or down. When I think about Apple's business, I find its revenues to be highly predictable.

However, the company's growth rate has slowed in recent years as its business has matured. In fact, when analyzing Apple's growth potential, while it achieved revenue growth of about 6% over the past ten years, the growth rate in the last three years has slowed to only about 2%, and profits have slowed to about 4%.

This means to me that Apple has become a low-growth company, and I don't think it makes sense to pay a high price premium to own this stock. So, while I think Apple is clearly a high-quality company, I wouldn't be interested in buying its stock alone until it reaches a cheap level, which is around $240 per share by the end of 2026.