Apple (AAPL): Stock Evaluation Contest Winner

November 10, 2017

Cabot Professional Stock Evaluation Contest Winner! Thanks to John M. for submitting this week’s pick, Apple (AAPL).

If you would like a complete evaluation of your stock pick, please visit our Contest Page.

 

Big, Resilient, Shiny Apple Inc. (AAPL).

There used to be a saying when PCs ruled the world that nobody ever got fired for buying IBM. For those of you who weren’t around then, that meant that any IT manager who tried to buy a truckload of PC clones for his office might just regret it.)

Today, you could almost say that nobody ever really regrets buying Apple (AAPL). The company has a monster $898 billion market cap, annual revenue of $229 billion, is owned by more than 5,000 institutional investors, pays a dividend with a 1.4% annual yield, trades at a relative bargain 16 forward P/E and has a king’s ransom in offshore cash that may be coming home if the funky tax plan crawling its way through Congress ever sees the President’s desk.

The person who asked for this evaluation asked a very simple question about AAPL: “Does it ever look this stock will stop its climb?”

It’s a fair question. After all, the long-term chart for AAPL looks like this.

Things haven’t always been rosy for AAPL, of course. There were some tedious times like 2008 and September 2012 through May 2013, and the stock took a whole year off from May 2015 to May 2016.

But in general, Steve Jobs (and, to a lesser extent, his successor) found a way to surprise, inspire and innovate his way to must-have device after device, keeping the iMacs, iPods, iPads and iPhones hot quarter after quarter.

Annual revenue growth is usually a staid single-digit: 9% in 2013, 7% in 2014 and 6% in 2017, with occasional outliers like the 28% triumph in 2015 and the disappointing 8% decline in 2016.

Like all Cabot analysts, I’m totally agnostic about what the future might bring, including the outlook for the iPhone X.

But I have what I think may be a better question than “will this stock ever stop its climb?”

The question is this: “Is AAPL the best stock to buy right now?”

And I’d have to say that I don’t think so.

From my perspective as a growth investor (and someone who specializes in emerging market stocks), I know that there are a ton of stocks that have outperformed AAPL over both the long and the short run.

In fact, If you look at the relative performance (RP) line of AAPL that shows how it has performed against the S&P 500 Index, you will see that from May 2015 through the end of October, the stock netted flat performance vs. the S&P. And if you extend that RP line farther back, you’ll see that AAPL has just matched the S&P’s performance since August 2012.

AAPL is easy to love. It’s a long-term winner, its products are shiny and appealing (I own the iPhone, an iPad, an iMac and a router from the company).

And as a long-term holding, whose mediocre performance against a broad-market index is slightly compensated for by a small dividend, there’s certainly a spot in any diversified portfolio for a little AAPL.

But AAPL isn’t really a leading stock from a growth perspective. It’s too well-known, too widely owned and just plain too big to deliver surprises.

So, will AAPL ever stop going up? Maybe not, as long as Tim Cook can keep delivering surprises.

But is it the right stock to buy right now? I’ll leave that to you, but my opinion is “probably not.”

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Is AAPL Stock Climbing Its Own Wall of Worry?

There’s an old saying that stock markets “climb a wall of worry.” If that’s true, then so do individual stocks—and the higher the profile, the greater the worry. Lately, Apple’s (AAPL) wall of worry has been as tall as the Empire State Building.

First, let me explain what exactly a “wall of worry” means. Actually, I’ll let Paul Goodwin do the explaining, in this excerpt from a story he wrote about the concept a few months ago:

“What the saying means is that a bull market isn’t a peaceful place. When the good times are rolling, investors are constantly tense, wondering how long they will keep rolling, fretting about whether a correction in a particular stock is going to turn into a rout and agonizing over whether to take profits in a position or let it ride.

“Experts and commentators do their part by issuing warnings about everything that could possibly go wrong with the economy, the markets and most leading stocks.”

AAPL would certainly fall into the category of “leading stocks.” And there have been countless warnings about what could go wrong with AAPL stock over the past year-plus—ever since its sharp downturn in the second half of 2015. We at Cabot have done it ourselves, advising readers to sell Apple a year ago to the day.

In the 12 months since, AAPL stock is up 42%, exactly triple the return in the S&P 500. During that time, AAPL has outpaced the likes of Amazon (AMZN), Facebook (FB) and Google (GOOG)—a veritable who’s who of the market’s great growth stocks. Here’s what a one-year chart of Apple stock looks like:


That’s quite a climb!

Against that backdrop comes Apple’s second-quarter earnings report, after the bell today (Tuesday). Having scaled the wall of worry, Apple’s earnings estimates are actually quite optimistic, with analysts expecting a 10.7% increase in earnings per share and a 6% sales improvement, which if true would mark the best top- and bottom-line growth for the company since the third quarter of 2015.

Is the sudden optimism a bad sign for Apple stock? Those are awfully high bars to clear, and part of what has fueled AAPL’s recent were earnings beats in each of the last two quarters. A miss could slow Apple’s momentum, and prompt a breakout to the downside for AAPL stock after three months of stagnation.

One thing is for sure: if Apple falls short of second-quarter estimates, it would undoubtedly bring all the stock’s naysayers back out of the woodwork. Ominous warnings about another major crash in AAPL stock would surface on virtually every financial website and blog out there, and Apple’s wall of worry would be rebuilt before Wednesday’s opening bell.

Apple certainly has its problems. Profits and sales have slipped considerably in the last two years, the brand has become stale amid an endless churn of iPhone upgrades, and it’s been years since the company produced a new product that has truly wowed consumers the way it used to with the late Steve Jobs at the helm. Those factors, plus a 32% drop in the stock from May 2015 to May 2016, have all contributed to the general feeling of doom and gloom surrounding AAPL on Wall Street these days.

Meanwhile, AAPL has quietly been one of the market’s strongest performers. Can it continue to surge, or has the stock reached the top of its wall of worry and there’s nowhere to go but down? The response to tonight’s earnings could be quite telling.   

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Is Apple (AAPL) Stock a Buy Here?

Apple (AAPL) continues to be one of the market’s favorite soap operas, kind of like “The Real Tech Wife of Cupertino.” When Apple reported earnings this morning, news that the company hadn’t sold as many iPhones as expected rocketed around financial sites at light speed, and AAPL was down a little over 1% early in the trading day, but narrowed its loss early in the session.

A 1% dip in AAPL scrubs off a little over $8 billion from Apple’s market cap, but that’s mostly just a bookkeeping blip when you’re dealing with a company whose worth is within shouting distance of $800 billion.

The reason for the negative reaction from investors is that the company sold “only” 50.76 million iPhones, which was down from 51.19 million a year ago.

But the reason the negative reaction was so small is that the dip in sales was blamed on a “pause” in buying caused by anticipation of the upcoming release of the iPhone 8. So investors had to balance a disappointing result with the presumption that the iPhone 8 will be a blockbuster. You can see the conflict playing out in this daily chart of AAPL, which shows both the four-week flat patch in AAPL ahead of earnings and the tiny pullback that didn’t even pull the stock below its April resistance.

News of good sales from iPads and a 10.5% increase in AAPL’s dividend probably also helped to soften the blow.

The plain truth is that it would have taken a much worse quarterly report to really torpedo AAPL. The stock has successfully transitioned from a growth stock to a dividend stock, and it is still a mega-cap favorite of institutional investors, including both mutual funds and hedge funds.

Is AAPL a buy here? It probably is, if what you’re looking for is a high-quality income stock that pays a reasonable dividend (the forward annual yield in 1.6%) and above average prospects for price appreciation. It’s also worth noting that of the 5.25 billion shares outstanding in AAPL, that only 53 million of them are trading short. And given how much short specialists enjoy making bets against big winners, that’s a pretty good endorsement.

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Apple (AAPL): The Next AAPL Stock Catalyst: Hollywood?

By Chris Preston, Staff Analyst

The biggest knock on Apple (AAPL), and perhaps the biggest drag on AAPL stock of late, is that the brand has become a bit stale. Consumers, and to a greater degree investors, have grown weary of the endless churn of iPhones and iPads, which lost their “wow” factor years ago. People want to see something from Apple that’s truly new.

To find it, Apple is turning to Hollywood.

According to reports, Apple is planning to launch its own original TV and movie producing studio to compete with the likes of Netflix (NFLX), Amazon (AMZN) and Hulu. The original programming would be made available to Apple Music subscribers, who currently pay $10 a month for the streaming music service. A streaming video service with original content would open up a whole new revenue “stream” for Apple and make its streaming music service much more competitive with rival Spotify.

Apple has apparently spoken with Hollywood producers in recent months about buying rights to scripted TV programs, as well as marketing executives with major film studios about hiring them to promote their content, which could include movies of their own. The company hopes to start offering original video content by the end of this year, though it’s likely to start with just a few programs in an effort to go for quality over quantity.

It’s too early to know how much a new streaming video service will impact Apple’s sales, which could use a boost after declining for three consecutive quarters. But that’s almost beside the point, at least initially. On Wall Street, what matters more is Apple’s image. Lately, the image of Apple among investors is that of a stagnating company that has already peaked.

Granted, the last year has actually been good to AAPL stock, with shares rising more than 12% since the beginning of 2016. But those gains were roughly in line with the Nasdaq’s over the same span, and immediately followed the stock’s decline from 132 to as low as 90 in the second half of 2015 and early 2016, so the rebound (especially in the past six to seven months) was driven mostly by market strength and value stock buying.

Now that those buyers are back on board and the stock is touching 52-week highs, it will take more than just the market to move AAPL again in 2017. AAPL stock needs tangible catalysts to recapture investors’ imaginations. And producing its own original content is enough of a departure to perhaps peak investors’ interests.

Of course, if the content is good, it could serve as more of a long-term catalyst the way award-winning original programs like House of Cards and Orange is the New Black has been for Netflix and Mozart in the Jungle has been for Amazon. We won’t know if that’s the case, however, until later this year at the earliest.

In the meantime, I wouldn’t necessarily advise buying AAPL stock based purely on the promise of original content. I’ve been quite skeptical of AAPL’s long-term prospects. But new innovations beyond the latest iPhone or iPad could extend its shelf life a bit, which is why it’s worth paying attention to how investors respond to AAPL stock as more information about its original content plan trickles out.

As they say in television … stay tuned!

Sell Apple (AAPL). And then invest in the next Apple.
By Timothy Lutts, Chief Analyst, Cabot Stock of the Month
From Cabot Wealth Advisory 5/2/16 Sign up for Cabot Wealth Advisory—it’s free!

Apple (AAPL) gets a lot of ink, and I’m generally not eager to add to it; I’d rather steer you to attractive investments (on both the growth and value side) that people are not aware of. The best opportunities are found where other investors are not looking.

But in the wake of Apple’s colossally disappointing earnings report last week, I feel inspired to once again explain some basic investing concepts, particularly as they relate to the best, most popular stocks.

1. A stock goes up when perceptions of the company improve; the increased buying power generally sends the stock higher over time.

2. In the cases of the very best growth stocks (in my lifetime these have included IBM, Microsoft, Cisco, Broadcom and Apple), the stock climbs until everyone who might possibly be an investor in it owns it.

3. At the peak, there is no way for perceptions to improve further. (Think of Apple last year.) More important, there are no more potential buyers of the stock!

4. Thus, when the company disappoints in some way (eventually, they always do), and some investors begin selling, there is not enough appetite for their shares and prices fall.

5. And because trends tend to last longer and go further than investors originally expect, the stock’s decline lasts a long time—and takes the stock down to unimaginable depths!

I last wrote about this phenomenon back in February, after Apple reported that iPhone sales growth had been slowing and the stock gapped down in response. And I compared Apple’s trajectory to those of IBM (IBM) and Microsoft (MSFT), its predecessors in the technology leadership group.

Here’s a passage worth repeating.

“Once IBM stock began its downward trek from the world’s favorite stock to a has-been, it took six years to complete that journey. At the end, it had lost 77% of its value!

“For Microsoft the numbers were similar. The downtrend lasted nine years (!) and took the stock down 72%!

“If Apple were to fall 75% (the average of those two) from its high, how low would it go? I hate to even print this, because the number will look so very low, but the answer is 34!”

So, do I hate Apple? No, I think Apple is a great company and I love Apple’s products. Every day I use my iPhone, iPad and MacBook Pro. If I wore a watch, I’d probably wear an Apple Watch. But I learned long ago not to confuse the company or its products with the stock.

The bottom line is that the weight that is pushing AAPL down will continue to grow, as more and more growth investors wake up to the fact that even a yield of 2% is not enough to compensate for the growing losses produced by a falling stock.

So I’ll conclude by saying what I said back in February:

Sell Apple. And then invest in the next Apple. For more information, click here.


The Case For—and Against—AAPL

By Timothy Lutts, Chief Analyst, Cabot Stock of the Month
From Cabot Wealth Advisory 12/14/15 Sign up for Cabot Wealth Advisory—it’s free!

The Case For AAPL

Apple may be the most respected consumer electronics brand in the world. Its users are loyal. Its migration to iPhone plans that provide users with a new phone every year should increase loyalty as well as generate more used phones for resale. And its premium pricing means it’s a very profitable company, with after-tax profit margins of 21.6% in the latest quarter.

Plus, according to Cabot’s ace value analyst Roy Ward, AAPL stock is undervalued today.

Here’s what Roy wrote in his latest update:

“Demand for iPhones continues to rise quickly after the highly successful launches of iPhone 6S and 6S Plus. iPhones are the number-one seller (62.5% of total sales) in Apple’s growing stable of electronic products.

“Apple has introduced Apple Pay, a new payment method allowing the owners of iPhone 6, iPhone 6 Plus and Apple Watch devices to pay for purchases with their phones or watches rather than with credit or debit cards. The new system is more secure and more private than plastic cards with magnetic tape. The Apple Watch became available in April 2015 and early sales of the device were brisk, but subsequent sales have dropped off considerably. When the iPhone was initially introduced, the sales trend was very similar. iPad sales are declining as a result of users switching to iPhones and Apple Watches.

“Apple signed a multi-year agreement in December 2013 to provide iPhones via China Mobile. The company’s sales in China during the September 2015 quarter soared 99%, after surging 112% and 71% in the two previous quarters. The iPhone’s growth is even more impressive after considering that the company’s rivals are experiencing declining sales in China. Doubling sales in China is not sustainable, but sales in Europe could begin to accelerate and offset any slowdown in China.

“Apple’s latest iPhone is now available on a monthly payment plan in the U.S. starting at $32, with free upgrades every 12 months. Apple’s leasing program will compete with wireless carriers, which offer their own installment plans for iPhones and other smartphones. Apple is also including its AppleCare warranty program as part of the monthly fee.

“Apple’s sales surged 28% during the 12 months ended September 30, 2015, after increasing 7% in the previous 12 months. Earnings per share (EPS) soared 43% in the latest period compared to just 14% in the prior 12-month period. Apple is taking considerable market share from competitors, both in the U.S. and overseas. Sales and earnings growth will likely slow somewhat in 2016, but Apple’s results will likely beat analysts’ modest estimates once again.

“At 14.3 times latest EPS with an expected five-year EPS growth rate of 14.0%, AAPL shares are clearly undervalued. The balance sheet is very strong with low debt and lots of cash.

The current dividend yields 1.9%, after a healthy increase in April. Apple’s PEG ratio of 0.90 also indicates that the stock is a bargain. My calculation of the PEG ratio uses the company’s current price divided by the company’s latest four quarters of earnings per share, which is then divided by the combined five-year forecast EPS growth rate and current dividend yield. I expect AAPL to advance 41% to my Min Sell Price of 165.32 within two years. Buy at 118.87 or below.”

That’s Roy, aiming for a 41% gain over roughly two years. And the odds are good that he’ll get it. After all, since he began publishing his Value Model on December 31, 1995 (almost 20 years ago), he’s racked up an impressive return of 1,089.1% compared to a return of 527.3% for Warren Buffett’s Berkshire Hathaway and the Dow’s gain of just 246.3%.

Generally, it’s not wise to bet against Roy.

The Case Against AAPL

On the other hand, AAPL is a unique company and there are a couple of reasons that it just might not conform to Roy’s system. Mainly, these reasons revolve around the hugeness of its valuation and the stock’s enormous popularity.

As I’ve told you many times before, when a stock that’s owned by almost everybody falls victim to a change in public perception, there are no potential new buyers of the stock left, and thus the pressure of the sellers tends to push the stock down rapidly.

When that happens, what looks like a bargain P/E of 14 can easily become a lower P/E, like 10—in fact, AAPL has traded at a P/E ratio of 10 within the past five years! So in my book, low valuation is not enough, particularly in the case of a very popular stock like AAPL.

Then there’s the stock’s trend. Trends, remember, tend to go further and last longer than investors originally expect. Just look at the trends of energy stocks this year!

So what is AAPL’s trend? You can make a case that the long-term trend is still up. On the other hand, the stock hasn’t hit a new high since May, and since then, it’s been underperforming the market, as measured by its relative performance (RP) lines.

And speaking of RP lines, a look at the long-term picture of AAPL reveals that its RP line actually peaked way back in September, 2012, more than three years ago.

So the long-term chart shows a divergence: AAPL stock has hit a new high since 2012, but the RP line hasn’t, and that’s a sign, pure and simple, that the stock’s momentum is slowing.

Conclusion

I don’t feel strongly about either the bull or bear case for AAPL. There’s no question that it’s a fine company with excellent products, but the stock is not the company, and in the absence of a clear bullish case, my preference is to look elsewhere.

Value Stock Apple is a Bargain

By J. Royden Ward, Chief Analyst, Cabot Benjamin Graham Value Investor
From Cabot Wealth Advisory 9/14/15 Sign up for Cabot Wealth advisory—it’s free!

There’s a war going on! Growth investors are proclaiming that Apple (AAPL) is done, caput. It’s history. As my Cabot colleague, Paul Goodwin, the masterful editor of the Cabot Wealth Advisory and Chief Analyst at the Cabot Emerging Markets Investor, remarked: “For any growth investors out there who have their eye on AAPL, I’ve got to ask, “What the heck are you thinking?” You can read about Paul’s thoughts on Apple in his September 12 Cabot Wealth Advisory. Simply click here.

As a value investor, however, Apple shares are an irresistible bargain! As Paul points out, Apple sells at a very reasonable 13 times earnings and pays a nice dividend yielding 1.9% annually. Further, Apple’s PEG ratio (current P/E divided by the forecast growth rate) is also very attractive at 0.86.

Paul Goodwin astutely concluded that Apple’s revenue growth decelerated in 2012, 2013 and 2014. I have dug a little deeper into the company’s recent revenue and earnings results, though. During the past four quarters, 12-month revenues have increased from 7% to 15%, to 21%, and to 25% for the most recent 12-month earnings per share year-over-year increase.

After lackluster results in previous years, recent revenue trends are clearly accelerating. Earnings per share increases are even more impressive: from 14% to 29% to 36%, and to 40% for the latest 12-months ended June 30, 2015. The current momentum is amazing for a company with annual sales of $224 billion and with $35 billion in cash sitting idle.

“Apple Shares Could Rally 50% on New iPhone Plan” Barron’s Magazine. In an article on Saturday Barron’s writer Alexander Eule proclaimed that Apple’s plan to lease iPhones and offer other free annual upgrades could pay off “handsomely” for the company and its investors. “A move Steve Jobs would have loved.”

What’s the big deal? Apple’s latest iPhone will soon be available on a monthly payment plan, starting at $32, with customers getting “free” upgrades every 12 months. The leasing program could be a game changer for the stock. Mark Mulholland, portfolio manager of Matthew 25 fund, thinks Apple shares are worth $170, a cool 49% above the current price.

Apple’s leasing program will compete with wireless carriers, which all offer their own installment plans for iPhones and other smartphones. Apple’s plan takes advantage of its 266 U.S. stores, which offer a better retail experience than those of smartphone carriers. Apple is also including its AppleCare warranty program as part of the monthly fee.

The leasing plan is designed to sell more phones and generate higher profits per phone, making it a win- win for the company. As buyers turn in their iPhones after one year, the old phones could become a profitable way for Apple to sell phones in emerging markets at bargain prices.

The new iPhones will hit store shelves on September 25. Any positive news about the leasing program will become a catalyst for Apple shares, especially since good news could also drive additional customer traffic into Apple stores.

“Today, Apple’s fair price is $170-plus.” Mulholland says. “Three to four years down the line, it is easily $200 to $250. And these aren’t aggressive numbers.” During the past month, Apple’s stock price has declined 0.89%, which is much less than the Standard & Poor’s 500 Index 5.99% tumble. Since January 1, AAPL shares have climbed 3.47% compared to the S&P 500’s decline of 4.75%.

Apple’s sales will likely increase 28% for the recent 12 months completed September 30, 2015. Sales will advance another 14% in the following 12 months, although the gain could be somewhat smaller depending on how Apple accounts for new lease income. Earnings per share will climb 26% for the 12 months completed September 30, 2015, and then advance 25% in the following 12 months

I currently recommend waiting for Apple’s stock price to test its recent lows and then buy when the stock price hits $101.75 or below. I advise selling if AAPL rises 56% to my sell price target of 158.50, which will likely occur within two years. For value investors, I can’t find a better bargain than Apple!

I will probably hike my Minimum Sell Price for Apple during the next few months, but you’ll need to subscribe to my Cabot Benjamin Graham Value Investor to find my new sell price recommendations for Apple. My Minimum Sell Prices are updated every month. To join my family of subscribers, click here. You’ll be glad you did.

Apple (AAPL): A surprise value stock

By J. Royden Ward, Editor of Cabot Benjamin Graham Value Letter
From Cabot Wealth Advisory 11/24/12 Sign up for free Cabot Wealth Advisory e-newsletter

This Value Stock Pick is taken from the pages of Cabot Benjamin Graham Value Letter, and selected because it’s trading below its true value, based on future sales. Value stocks are intended to be held for a longer period of time and should be sold when they reach their minimum sell price.

Apple (AAPL) is a bit of a surprise as a value stock, but that’s what happens when a stock drops from near 700 to the mid-500. Apple’s iPhones, iPads, iPods, iMacs and Mac computers are instantly recognized design icons, and they have triggered year after year of double-digit revenue growth.

The most recent year saw revenues up 27% and earnings growth of 23% over the previous year. AAPL has rumbled from 78 back in 2009 to 700 in September. But a rare earnings miss caused AAPL to plummet, lowering its P/E ratio to a mouth-watering 13, and editor Roy Ward expects the stock to hit its minimum sell price of 972 within two years.

Apple also initiated a dividend for the first time this year and the forward annual yield is 1.9%. Needless to say, plenty of Apple devices should be flying out of stores this season. You can buy AAPL anywhere under 639.

Apple (AAPL): May be close to the point of peak perception

By Timothy Lutts, Chief Investment Strategist and Editor of Cabot Stock of the Month
From Cabot Wealth Advisory 4/11/11 Sign up for free Cabot Wealth Advisory e-newsletter

Last week brought the news that when the market closes on April 29, Apple’s (AAPL) weighting in the Nasdaq 100 will be cut from 20.5% to 12.3%.

The reason? The stock has been too successful, and the “extra boost” that it was given as a small stock when the index was last adjusted in 1998 now makes the stock’s impact on the index excessive.

Other successful growth stocks will see their weightings reduced as well.

At the same time, the weightings of the titans of a decade ago, Microsoft (MSFT), Oracle (ORCL) and Intel (INTC) will be increased, in part because these stocks haven’t kept pace with AAPL.

The short-term implication is that institutions and indexes that seek to simply replicate the performance of the index will need to sell some of their APPL and buy more MSFT, ORCL and INTC.

But what does it mean in the long-term?

Consider this.

The only other special rebalancing of the Nasdaq 100 came in 1998, just before the top of the tech bubble.  In that rebalancing, Microsoft, which had briefly topped a 25% weighting, was the target of the biggest cut.

And what’s happened since?

MSFT stock is lower today than it was back then, even though Microsoft’s revenues and earnings have both grown more than four-fold.

Now, I’m not predicting that AAPL will suffer the same fate. History may rhyme, but it doesn’t necessarily repeat.

Nevertheless, it’s important to be aware of all the factors that influence stocks’ moves, and in the case of leading stocks in particular, you’d be remiss not to consider the role of public sentiment.

In this case, Apple is a very highly regarded company, whose products are increasingly loved by people all over the world. And that’s great for business, but it also means that you should be aware that Apple may be close to the point of peak perception, just as Microsoft was 13 years ago.

For the record, I’ve been an Apple user since 1987. I’ve bought more Apple computers than I can count, for both business and home use, and today I’m a regular user of MacBook Pro laptop, an iPad and an iPhone. They’re all fabulous products, and I think the company has a great future.

But I know better than to confuse the company with the stock. They’re two different animals, as Microsoft has demonstrated so clearly over the past 13 years.

Editor’s Note: Subscribers to Cabot Top Ten Weekly recently nabbed 36% profits in AAPL! To learn more about other leading stocks recommended by growth stock expert Michael Cintolo, click here. Ten new trades are available online now and every Monday. Don’t miss them!


 


Tim Lutts


Timothy Lutts

President, Chief Investment Strategist, Editor of Cabot Stock of the Month

Timothy Lutts heads one of America’s most respected independent investment advisory services, publishing eight newsletters to more than 165,000 subscribers around the world. Tim leads a dedicated team of professionals who serve individual investors with high-quality investment advice based on time-tested Cabot systems. Under his leadership, Cabot has been honored numerous times by both Timer Digest and the Hulbert Financial Digest as among the top investment newsletters in the industry. Tim also edits Cabot Stock of the Month.


Apple (AAPL): Sold 4.2 million iPad tablets in the most recent quarter

By Elyse Andrews, Editor of Cabot Wealth Advisory
From Cabot Wealth Advisory 10/23/10 Sign up for free Cabot Wealth Advisory e-newsletter

Apple (AAPL) sold 4.2 million of its iPad tablets in the most recent quarter. While the iPad isn’t strictly an e-reader, it does compete with Amazon’s Kindle, and is especially popular with customers seeking more functionality from the device. Here’s what Mike had to say about the stock in late September:

“Apple needs no introduction, as it’s one of the best-known (and best-loved) companies today. The big news during the past few months was probably news that did not come about—after a well-publicized mess-up with its new iPhone (antennaegate), consumers didn’t storm out and the issue seems to be resolved. And that allows investors to look ahead to the many other irons Apple has in the fire, such as the fast-selling iPad (some now see north of 20 million sold during the next 12 months), a possible new iPhone using Verizon’s network (this could be particularly huge for business), new Mac computers, and the new Apple TV, which allows Netflix streaming and movie rentals right to a TV. Sales and earnings growth remains terrific, and valuation, at 22 times trailing earnings, is surprisingly reasonable.”

AAPL hit new highs recently and while it stumbled a bit after its earnings report on Monday, the stock recovered as the week went on. And the company is clearly going strong and has a lot of potential for the future. Just this week, Apple held an event focusing on its Macintosh computer where it announced a new operating system, called Lion, and a new version of its ultra-thin Macbook Air.

Surely, if the trend toward reading on devices, rather than from books, continues, AAPL stands to benefit. You could buy the stock here and hope for the best or you could get more expert buy, sell and hold advice from Mike in Cabot Top Ten Weekly. Click here to learn more about Apple and other leading stocks.



Elyse Andrews Elyse Andrews

Editor of Cabot Wealth Advisory

Elyse Andrews edits Cabot Wealth Advisory, a free email newsletter that offers independent, no-nonsense investment advice on how to build long-lasting wealth written by Cabot’s analysts and editors. Every Saturday, Elyse writes the Weekend Digest, which includes her column and a summary of Cabot Wealth Advisories that readers may have missed during the week. Elyse is also a regular contributor to The Iconoclast Investor, a blog for Cabot editors and readers to share their views and interact with each other.


Apple (AAPL) at All-Time High Price

By Timothy Lutts, Chief Investment Strategist, Editor Cabot Stock of the Month

Originally published in Cabot Wealth Advisory 12/28/09

 

Apple (AAPL) broke out of a basing pattern today, gapping up to new all-time highs.

Now, Apple is far from an undiscovered stock. With revenues of $37 billion and a market capitalization of $192 billion, it’s a giant, and my preference is for smaller companies with more obvious upside potential in investor perception.

Nevertheless, Apple’s chart is sending a strong signal.

For the past 10 weeks it’s been building a base at the 200 level, which is where the stock topped out at the end of 2007. And today it gapped up to all-time highs, telling us big institutional money is moving in.

The only “news” lately is speculation that Apple’s long-rumored tablet computer will be released on January 26, in both 7″ and 10″ screen formats, and that it will be a big hit. It certainly sounds plausible, and combined with the fact that Apple still has great numbers (revenues up 25% in the third quarter and earnings up 44%), I think it’s reason enough to buy the stock.

Tim LuttsTimothy Lutts
President, Chief Investment Strategist and Editor of Cabot Stock of the Month

Timothy Lutts heads one of America’s most respected independent investment advisory services, publishing eight newsletters to more than 165,000 subscribers around the world. Tim leads a dedicated team of professionals who serve individual investors with high-quality investment advice based on time-tested Cabot systems. Under his leadership, Cabot has been honored numerous times by both Timer Digest and the Hulbert Financial Digest as among the top investment newsletters in the industry. Tim also edits Cabot Stock of the Month.

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Apple (AAPL) – Price Boost from IPhone Sales

By Paul Goodwin, Editor of Cabot China & Emerging Markets Report

Originally published in Cabot Wealth Advisory 5/4/09

 

One of our rules for evaluating growth stocks is that the leaders of a previous bull market are seldom the leaders of the next one. In fact, the odds are about four-to-one against it.

But Apple (AAPL) is apparently beating those odds. The stock, which peaked at 203 during the last days of 2007 and completed a kind of double top at 192 about a year ago (with a dip to 115 in between), is now coming off a new base after bottoming at 78 in January.

It’s not just the run from 78 to 138 that makes AAPL attractive. And it’s not just the boost the stock will get when (and if) Steve Jobs reports for duty again.

No, it’s the flood of sales for the iPhone and all the apps for the iPhone flowing together with the billions of songs purchased from iTunes and the still substantial sales of iMacs and PowerBooks to make a river of revenue. So far, analysts haven’t been able to get their minds around the money you can make by offering consumers “insanely great” products. And we’re not even talking about the possibility of getting the iPhone into the hands of Chinese consumers.

Apple’s revenues during the fourth quarter of 2008—the lowest point of a very low period for the market—were still up 6%, which improved to 9% in Q1. Earnings were up 1% in Q4 and have improved to a respectable 15% in Q1. AAPL isn’t cheap (P/E ratio of 23) and isn’t unknown (857 institutional supporters). But it’s pretty much broken every rule in the book, and if it wants to be a leader in this new bull market, I’m not going to say no to it.


Paul GoodwinPaul Goodwin

Emerging Markets Specialist, Analyst and Editor of Cabot China & Emerging Markets Report

A researcher and writer for over 30 years, Paul Goodwin has been a member of the Cabot investment team and editor of Cabot China & Emerging Markets Report since 2005. Under Paul’s stewardship, Hulbert Financial Digest rated Cabot China & Emerging Markets Report the number-one-rated newsletter of 2006 with a 78.6% gain for the year, the number-one-rated newsletter of 2007 with a 74.1% return. Cabot China & Emerging Markets was also named 2007 Investment Letter of the Year by Peter Brimelow of MarketWatch.

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Company Details

Apple
1 Infinite Loop
Cupertino, California, U.S.A. 95014
408-996-1010
http://www.apple.com
Index Membership: S&P 100, S&P 500, S&P 1500 Super Comp, Nasdaq 100
Sector: Technology
Industry: Personal Computers
Full Time Employees: 34,300
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