Stock (Symbol)

Apple (AAPL)

Stock Price

$117

Sector

Technology

Data is as of

November 19, 2015

Expected to Report

Jan 25 – Jan 29

Company Description

Apple Inc. (Apple) designs, manufactures and markets mobile communication and media devices, personal computers, and portable digital music players, and sells a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications. The Company’s products and services include iPhone, iPad, Mac, iPod, Apple TV, a portfolio of consumer and professional software applications, the iOS and OS X operating systems, iCloud, and a variety of accessory, service and support offerings. The Company also sells and delivers digital content and applications through the iTunes Store, App StoreSM, iBookstoreSM, and Mac App Store. It sells its products worldwide through its retail stores, online stores, and direct sales force, as well as through third-party cellular network carriers, wholesalers, retailers, and value-added re-sellers. Source: Thomson Financial

Sharek’s Take

Apple (AAPL) has some tough comparisons ahead because the iPhone 6 was released a year ago. Profit growth is expected to slow from 38% to 7% next qtr, but I’m optimistic the company could deliver teens profit growth during the next year. Meanwhile the stock has lost its momentum and doesn’t seem to be responding to anything the stock market does — good or bad. Still, in the end this stock sells for just 12x earnings and the company pays a dividend of 2%. There’s good upside here as the P/E could go to 15 which would be a $148 stock next year, for a gain of 26%. This is a stock to buy-and-hold as AAPL is a tough one to trade.

One Year Chart

Great profit growth the last four qtrs due to the iPhone 6 launch and also strong Chinese demand. Sales increased 22% last qtr and Greater China sales rose 99%. But those qtrly estimates (bottom/right) don’t look so hot. Apple has beaten the street the last 4 qtrs so these might be too pessimistic. P/E of 12 next to the Est LTG of 15%…AAPL seems very undervalued.

Fair Value

It’s something how Wall Street doesn’t give AAPL the appreciation it deserves. 12x earnings? C’mon. That’s too low. Perhaps investors warm up to this stock next year?

Bottom Line

AAPL has been a tough stock to hang onto the last decade, even though this view looks good. The stock doesn’t move on earnings growth anymore. I don’t even know what does make it go higher. Strange.

Apple stock has lost its momentum and is just treading water right now. Still, I feel the company can grow profits at a double digit rate next year and the stock’s a bargain at 12x earnings. A P/E of 15 is reasonable, and that gives AAPL huge upside. In the meantime AAPL is ranked 35th of 36 stocks in the Growth Portfolio Power Rankings.