Apple strong for the long term
July 13, 2014
When Steve Jobs, CEO of Apple, passed away, I did a news piece saying that with his passing, so could pass Apple’s (AAPL) dominance of the tech world, as Jobs was the visionary genius that brought us all those wonderful life- changing products.
Shortly after I made that prediction, it came to be, and Apple ceased being the Wall Street darling it once was. The magic was wearing off, its competitors moving quickly to outdo, out-sell and out-innovate. New Droid devices and tablets from everyone and everywhere stole Apple’s market share, and its share price plummeted.
After a significant hammering of its stock, I penned another article saying Apple may not be the market dominating powerhouse it once was but sporting a great balance sheet and solid dividend, it was a good long-term stock to hold. The stock ran shortly thereafter and capped that performance with a long anticipated 7-1 stock split.
With the stock split bringing its share price down to around 91 bucks a share and still sporting a 2.1 percent annual dividend, Apple has lots of cash, still has a darn good brand name and lots of cash in its coffers.
On a price per earnings basis, compared to Google, which is selling for 18 times earnings, Apple is relatively cheap at six times earnings.
With a solid balance sheet and decent dividend, it’s the one stock which pays like an Exxon or Coca Cola, yet has the chance of doubling or even tripling, which the large cap monsters like Coke and Exxon probably do not.
Apple products aren’t going away anytime soon and its reload applications like iTunes and the App Store will generate cash flow for a long time to come. And who knows, the folks at Apple might get lucky and again wow us with a fantastic new product, which will set the world and its stock on fire again.
Apple is the best of both worlds in my opinion, and although it’s not the momentum stock it used to be, it’s a long-term jewel and should be considered as part of a solid diversified portfolio.
This article expresses the opinions of Marc Cuniberti. He hosts “Money Matters” on KVMR FM 89.5 and 105.1 FM at noon Thursdays and is syndicated on more than 30 radio stations throughout the U.S. His website is http://www.moneymanagementradio.com.
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