Apple Inc (AAPL)

(Top Pick Jan 15/15, Down 7.65%) They are in the midst of a ‘weak refresh’. The market is looking to the iPhone 7 later this year. Here is a company that makes 60% of their revenue from an iPhone with a 40% margin. Their customers are loyal. 73% of iPhone users have an iPhone 5 or older. There is huge opportunity due to the upgrade cycle to the 7 and successive products. A third of their market cap is in cash.

Apple was one of the clues that led him to believe that we could wind up in some kind of a correction, as it started to underperform the market in the last few months. Technically it took out some important levels in November and December. You want to identify companies, that for whatever reason, have prices that are holding up much better than the market. Where they have fundamental characteristics that point to something changing for the better and prices behaving like they should be, given what you think you know. Buying a stock that everybody owns, at a time when the stock is underperforming its peer group and the market, is probably not the right thing to do. As the stock price rallies, it is going to run into people who are just waiting for their opportunity to exit at “their” price. Good company, just not a good stock at the moment.

Shares are trading at very nice valuations and they have a very solid balance sheet with tons of cash on hand. Trading at 10X earnings, and still probably a 12% growth rate. Maybe the iPhones are not going to sell as quickly going forward. The company is still innovative, but the iPhone is still 60% of their business. There are rumours of them getting into the car business, iWatch, and maybe the gaming console, but the iPhone is going to be a tremendous part of their revenues for some time. This is getting close to his stop losses. He wouldn’t Sell until there is a little more of a breakdown. If you own use a stop loss.

Very constructive on this company. Trades around the stock by adding when it is low and selling higher up. Have a great cash position, and will be introducing the new iPhone 7. There could be a lot worse companies you could own.

Has tremendous respect for the company and the brand. The stock has sold off a little bit. If you X out the massive cash position, it is absolutely not an expensive stock. Half their profits are the iPhones, and iPhone sales year-over-year are tougher and tougher to grow. He struggles with this.

It was really beaten up. The iPhone is the largest part of their business. In the West, everyone who wanted an iPhone has one. However, in China, there is growth in iPhones. They are constantly innovating. They have lots of cash and a great history of raising their dividends. You definitely buy at these prices.

People frame companies. They think this one is a tech company, but he thinks it is a consumer entertainment company and a very good one. They are selling a consumer branded product. PE is 9 times with an enormous amount of cash and will likely increase the yield on the dividend. He expects a share buyback. He thinks there is tremendous upside here.

There is market risk. The company is not expensive, has a lot of cash and can withstand a lot of uncertain times. If we get a pull back, they will fall. Look for $90 to $120-$130 trading range over the next couple of years. He does not think it will grow.

It had struggles in the last year. He thinks they are getting off the dependency on selling a new phone to maintain earnings. There is massive cash on the balance sheet.

Has a low PE. The phone business is not going to be growing as robustly as people think. It is hard to get people to buy Apple in emerging markets, because it is quite an expensive product. However the company has a great balance sheet. They can increase the dividend and can buy back shares. He would like to see the numbers on their phones in the next couple of months.

He likes the company fundamentally. It is putting up 20%-30% growth numbers and doing extremely well. They are in the right market niches. He wouldn’t see any reason to worry about this one right now. There are still positive revisions in earnings and revenue growth is there. Good product cycles.

Likes this very much. It is not the crazy, volatile stock that Google (GOOG-Q) or Amazon (AMZN-Q) is. He would be a buyer of it in here. It is going to have a good year.

Chart shows some deterioration in the upward trend. Looks like it went into some kind of a parabolic top, but then broke down. One saving grace technically is support that comes in just below where it is right now. It will be interesting to see if it can hold this level. If not, the chart might be showing a head and shoulders top, and you have to watch that. If it breaks the current level by a couple of dollars, it will be a bad scene. If it holds, it might not be so bad for a trade.

By the numbers, this is a fantastic company. Cheap on a multiple basis, has lots of cash, and an activist investor kicking the tires from the outside. All of that is good. Has become a little discouraged because 50% of their business is the iPhone, and how do you grow iPhone sales. They have to market cars and automotive, to really move the needle next. Doesn’t think you need to own this.

They report late January and we will see then how they did during the holidays. The stock will be skittish over the holidays. Wait for the earnings. He likes it and thinks it is a very good valuation story at 11 times earnings. We are going to see a major refresh in 2016 into the summer and fall.