Investors advised to buy Apple stock after 'insanely insane' selloff

Posted:
in AAPL Investors edited January 2014
After eight weeks of Apple's plummeting value, one analyst believes the selloff has reached a point of being "insanely insane."

Brian White of Topeka Capital Markets is baffled by the sharp selloff of Apple stock during the company's strongest quarter of the year. In the latest downturn, the company's value is off 28 percent from its peak in September.

He noted that Apple has delivered annual growth that is 13-fold greater than the S&P 500 over the last eight years. Despite this, Apple trades at a 20 percent price-to-earnings ratio discount when compared to the S&P 500.

"While we don't expect Apple to grow (earnings per share) by 92% per annum over the next five years, we believe 20-30% growth is reasonable based on the company' slow market share in mobile phones and PCs, combined with growth opportunities in tablets and new potential areas such as Apple TV," White wrote in a note to investors on Monday.

Stock
Apple stock price over the last three months, via Yahoo Finance.


Apple had $121.3 billion in cash at the end of its fiscal year 2012, amounting to nearly $128 per share, or 24 percent of the company's stock price. Even if Apple decides to pay out a higher dividend to investors, White believes Apple will still hold nearly $204 billion in net cash by the end of fiscal 2014, which would amount to $212 per share or 40 percent of the current stock price.

"As such, the dividends that Apple can afford to pay out in the future are significant," White said, "and there is no reason why Apple should not currently be paying out at least a 3-4% dividend yield (or $16-$21 per share) versus the current 2% yield (or $10.60 per share)."

Despite recent losses, Topeka Capital Markets is standing by its $1,111 12-month price target for AAPL stock.
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Comments

  • Reply 1 of 55


    insanely insane


     


    "Steve Jobs would never have gone meta."

  • Reply 2 of 55
    Apple's P/E is astounding considering their product quality, margins, and market potential of current and future products.
  • Reply 3 of 55
    its not about what they are doing. its about what will drive growth in the future. Apple TV is starting to feel distant and how many more ipad variations can they really do ?

    Apple Fan and Stock Holder
  • Reply 4 of 55

    Quote:

    Originally Posted by Farshad Foroudi View Post



    its not about what they are doing. its about what will drive growth in the future. Apple TV is starting to feel distant and how many more ipad variations can they really do ?

    Apple Fan and Stock Holder


    While Apple's hardware receives most of the focus, I think their greatest potential lies with their software. This is where the real profits lie, and they have only scratched the surface, here.

  • Reply 5 of 55


    jobs is dead and apple stock will continue to drop because of all the other alternatives on the market


    besides apple investements are in other countries they are not here as for capital gains remember you re elected the person in office romney offered 9.5 million jobs obama zero now we all will take a bite of the s*** sandwhich

  • Reply 6 of 55
    Strange. Would be good advice when the stock was 530, but not right now at 630. Oh well, the world investors live in...
  • Reply 7 of 55


    Originally Posted by PhilBoogie View Post

    Strange. Would be good advice when the stock was 530, but not right now at 630. Oh well, the world investors live in...


     


    See, you're listening to AI for your stock advice, which is a ludicrously bad idea since the thing has been broken for months.




    Apple is at 550, up 25 already today.

  • Reply 8 of 55
    It's taxes. Investors are selling off this year to avoid increases in capital gains and income taxes next year... For the middle class, now is the time to buy.
  • Reply 9 of 55
    Mostly of the sell off was due to Tax scare coming for 2013.. Apple has made the most returns and so many are selling off to pay on capital gains.. If you look at how much was sold though, it was a fraction of the outstanding stock.. The one apple exec only sold like 1% of his stock, but got like $10m in cash for it.. most likely to cover gains taxes he expects to hit him.

    But when people see an Exec selling, people panic. lol, thinking it's some type of sign.. I swear.. Wall Street is worse than a 15 year old teenager when it comes to rumors and junk.. It really is like it's run by he said/she said.. there is no true reasoning behind it anymore.. sad really.. Might as well as read the funnies to get your stock advice!
  • Reply 10 of 55
    I see the OS becoming more like the iPad. Im not sure this is what computer users want if windows 8 launch is any indication. Of course Apple will do a better job then windows. Wall Street is looking at the money maker that's the iPhone. Even if the software side doubled their business. It would not resolve the lack of innovation coming out of the iPhone division. We need to see a bright future for iPhone growth or replacement/alternative . What will Apple do to get new iPhone customers, not existing ones. Thinner iphone? Faster iPhone?

    Apple TV was always going to be the next growth center. Im not seeing enough rumors to support that anymore. Possibly car integration ? But even that has a limited profit center.

    Holding Long.
  • Reply 11 of 55
    What is "slow market share"? Is it like a 486 CPU? :)
  • Reply 12 of 55


    Originally Posted by Farshad Foroudi View Post

    I see the OS becoming more like the iPad. Im not sure this is what computer users want if windows 8 launch is any indication.


     


    Windows 8 ? iOS


    Windows 8 ? OS X


    Windows 8 ? anything relevant for comparison






    What will Apple do to get new iPhone customers, not existing ones. Thinner iphone? Faster iPhone?



     


    Why can't you think of any meaningful features? Like a Passbook that handles all manner of purchases.






    Apple TV was always going to be the next growth center.



     


    Why? I mean sure, yeah, it will, but.

  • Reply 13 of 55


    Apple also has a lot of potential in the enterprise for their mac computers and software. I hope they take advantage of the momentum they have gained with the iPad and iPhone.

  • Reply 14 of 55
    quinneyquinney Posts: 2,523member
    I see the OS becoming more like the iPad. Im not sure this is what computer users want if windows 8 launch is any indication. Of course Apple will do a better job then windows. Wall Street is looking at the money maker that's the iPhone. Even if the software side doubled their business. It would not resolve the lack of innovation coming out of the iPhone division. We need to see a bright future for iPhone growth or replacement/alternative . What will Apple do to get new iPhone customers, not existing ones. Thinner iphone? Faster iPhone?

    Apple TV was always going to be the next growth center. Im not seeing enough rumors to support that anymore. Possibly car integration ? But even that has a limited profit center.

    Holding Long.

    Apple can greatly increase its sales, just by expanding in heavily populated areas of the world, where their current presence is minimal.
  • Reply 15 of 55
    They keeps showing they don't care about their pro users. Lets see if Cook changes direction.
  • Reply 16 of 55
    I think Apple TV is not likely to be the big game changer every thinks. Unfortunately, this is not due to Apple's lack of creativity or talent, it's that there are so many players who don't want to play nice with Apple. The music industry signed onto iTunes very reluctantly and slowly. TV and film studios will be much slower.

    Where I think the real opportunity is going to be, is mobile, but not in handheld. I'm thinking CARS! Forget dongles and bluetooth, just put the iOS in the car. You've got everything from the cloud now - music, podcasts, internet radio, navigation, phone, text, contacts, calendar, email, Facebook, all integrated in the car with Siri voice control. You don't even need your iPhone in the car.
  • Reply 17 of 55


    Originally Posted by Farshad Foroudi View Post

    They keeps showing they don't care about their pro users. Lets see if Cook changes direction.


     


    And you think that has anything to do with the stock price?

  • Reply 18 of 55
    "He noted that Apple has delivered annual growth that is 13-fold greater than the S&P 500 over the last eight years."

    What he failed to mention is that seven of those eight years were while Steve Jobs was still living. The fact that Apple's co-founder and visionary leader is now dead should factor highly in any analyst's opinion. I would take this recommendation with a very large grain of salt. Apple's days of insanely rapid growth are behind it. The stock is more likely to settle into a narrow trading range typical of an equity that pays dividends, much like Microsoft's stock has.
  • Reply 19 of 55
    flaneurflaneur Posts: 4,506member
    What will Apple do to get new iPhone customers, not existing ones. Thinner iphone? Faster iPhone?

    Smaller iPhone? Wearable iPhone? Wrist Pad?

    Wearable screens?—which would be a wearable, 3D, Apple TV?

    When it comes to personal and portable, Apple is an invention machine. I'm not worried about future growth.

    Then there's China . . .
  • Reply 20 of 55
    There's no bigger herd of sheep than investors.
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