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why I finally bought AAPL (for my real portfolio)

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January 18, 2013 – Comments (3) | RELATED TICKERS: AAPL , BRK-B

I had always avoided AAPL like the plague, since it is a glamor stock: the price is determined by headlines, rumor, gossip, and cocktail party chit-chat. It is randomly in and out of fashion depending on the whim of the jet set or analysts.

Then, something interesting happened: I was using the very Foolish Stock Screener, and suddenly a miracle: Steve Job's lifework kept popping up. Judged by traditional measures, it stands up rather well: P/E, PEG, market cap, even a modest dividend yield.

From my perspective, most of what I read about AAPL (and, sadly, this includes multiple daily TMF articles) is simply noise: this or that idevice gaining/losing market share, ecosystems and various apps, refresh cycles, screen sizes/OLED/Retina, supply chains, multi-core CPU chips, Samsung/Android, patent wars, and so forth.

From a traditional perspective, this company stands up rather well:

--well run by a top notch management team

--quality products that people like and command a premium price

--loyal customers

--very rich profit margins

--forward outlook unlikely to be caught flat-footed

--robust financials

--a pile of money bigger than many central banks with little debt

In the end, I expect this to be a permanent core holding in my portfolio, not unlike BRK-B that I do not have to constantly fret over. Note carefully that nowhere does my analysis mention stock price or 52 week high/lows.  

3 Comments – Post Your Own

#1) On January 18, 2013 at 12:21 PM, ETFsRule (99.94) wrote:

"--forward outlook unlikely to be caught flat-footed"

This is the one I'm not sure about. Jobs came up with most of their innovative ideas. To keep growing, either the iCloud needs to be a hit and help drive sales of their other products, or they need to come up with another big idea on par with the iPad.

I do like the company though and their valuation looks reasonable.

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#2) On January 18, 2013 at 5:48 PM, ElCid16 (96.90) wrote:

--well run by a top notch management team

--quality products that people like and command a premium price

--loyal customers

--very rich profit margins

Sounds just like Research in Motion 5 years ago.  :)

I kid, I kid. 

 

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#3) On January 18, 2013 at 9:37 PM, awallejr (79.57) wrote:

It is not the same company as BRK.  Being a technology based company things can turn bad fast with the changes in technology.  Apple as a computer company was near bankrupt.  The Ipod and Itunes is what saved it. 

Now it is mainly a telephone company.  Should T and Verizon decide no more subsidies (and I predict it will happen sooner than people think) Apple can get nailed hard since many and in particular the emerging markets simply can't afford the unsubsidized phone.

While I have Apple greenthumbed, when dealing with technology you can't be complacent.

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