Editor's Choice

Who's Worried About Apple?

Josef Ray is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

An investor is a confident “calculated risk taker” who bases his decisions on sound financial analysis and the study of market trends and movements. While fundamentals-focused investors find it difficult to stick their guns on stocks that show weakness such as in the case of Apple (NASDAQ: AAPL) in its near 20% three month sell-out, technical analysts have a different story to tell.

Ken Fisher, one of the longest-running columnists at Forbes and a billionaire and fund manager himself with special interest in tech stocks signified his confidence in Apple when he increased his stockholdings to 1,000% at the last quarter of 2012. At the time he bought these additional shares, there was growing concern about the saturation of the market of products made by Apple. Financial analysts are confident that Apple will carry on its business lead in sales and revenues are seen to increase by up to 25% by the 2013 monetary period. The holiday season is expected to bring in most of these revenues with consumers buying iPhones and iPads in increasing numbers and as production of these products develop into something more capable.

Stockholders that have invested in Apple have always known its capability in generating cash. Through the years, it has accumulated over $45 billion that can confidently cover its 2% share yield or key acquisitions. The tech giant trades at only 9x forward income and is the most inexpensive among the top tech hardware companies. Its anticipated EPS expansion rate at 21% is the best in the long-term scenario and puts the company’s PEG ratio at 0.5, earning itself the distinction of being a an immersed value-oriented investment prospect. Apple’s EPS at 44.16 and P/E at 11.99 is indicative of its strength compared to Microsoft’s (NASDAQ: MSFT) EPS 1.85 and P/E 14.65 or Google’s (NASDAQ: GOOG) EPS of 31.92 and P/E 22.01. Even when Apple’s market share drops, it still rakes in 50% of the total profit that comes from global smartphone sales.

In terms of competition, Apple is only rivaled but never equaled. They have always led the way in product innovations and competitors look to their newest product offering to benchmark their own product improvements from. They will continue to be a leader in the market. Competitors lap at their heels to bite off a share of the market and succeeding they will slightly rock Apple’s boat but headway is always achieved when differences are mended just like the recent reunification of Google Maps with the iPhone.

Apple’s announcement to make available their iTunes in more than 40 newly added countries, a move to improve its media dominance in new regions is a plus for them. This step signifies the company’s international presence in the realm of music/movie software and puts them ahead of Google’s Android and other platforms.

Competition is what drives an industry to improve its products and please its customers. Apple has been unrelentingly at it for more than 35 years now. In fact, they have just lately sold an “early years” computer to avid collectors at an impressive cost of $64,000. It does pay to “if you want an Apple, own one” as their ad goes. Apple has its share of successes and failures but has always held its ground. Forward-looking investors have seen quick gains on individual stock but with the recent negative opinions about Apple and its perceived volatility, one just has to go by gut-feel with flair to make an investment decision. The flair is trust in the company you are investing your money in based on their track record. Apple has given value to its customers and shareholders and is here to stay in the game and keep its promise. 

JosefRayDagatan has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Google, and Microsoft. Motley Fool newsletter services recommend Apple, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

blog comments powered by Disqus