Long term investment: long Apple
Today Apple reached a new 52 weeks low at 431.88 in a historical fall, losing from September highs nearly 39% of its market value. Moreover it closed red 8 of the last 10 trading days.
We believe this is a great opportunity to buy one of the greatest companies of our time and we have strong convictions that in a medium to long term time horizon this stock is going to double its value. The smartphone and tablet industry is not going to stop any time soon since penetration in huge markets such as India or China is just starting (AAPL sales in China alone grew 67% in last quarter).
We base our assumptions on several figures:
– Net cash alone accounts for 105$ of the share value
– Operating cash flow of last quarter was around $24 per share
– P/E multiples are ridiculous with regard to competitors, well below 10 at full price, taking into account the net cash are around 7 (Google’s P/E is over 24)
– Last quarter sales were up 18%, iPhone revenues +28%, iPad revenues +22%
We are also confident with the benefits of a major release such as the increasingly rumored iWatch which could generate $10 billion in Sales or app-based Apple TV.
Lastly we believe that dividend yield is going to increase significantly in the next few years, maybe coupled with a stock split, making Apple at current prices one of the best buys for long term investing.
We suggest deeper analysis for interested readers:
#1 Is Apple moving toward safe haven status within a long term trading range?
#2 Apple is not worth 460