Is Apple still a growth stock?

“Given the fact one of the first posts I submitted for this blog was titled, ‘Why Apple Is Worth At Least $650,’ I couldn’t help but question a recent article saying Apple won’t hit $700 again. While it’s true my original post was from January of 2012, I figured roughly a year later is as good a time as any to revisit my original conclusion,” Chad Henage writes for The Motley Fool. “In the article called, ’4 Reasons Why Apple Won’t See $700 Again,’ the author makes four points to show why Apple won’t reach its prior levels.”

Slowing Growth In Phones: “Growth in phones is slowing as competition increases.” Since the iPhone lineup makes up 56% of Apple’s total revenue, a slowdown could cause the company’s revenue and earnings growth to change dramatically. However, when it comes to the mobile phone market, Apple is actually gaining market share on a global basis.

Shrinking Margins: The author suggests that Apple’s margins are shrinking because customers are choosing the cheaper iPhone 4 and 4S models over the iPhone 5. In addition, the iPad Mini is cannibalizing sales of the full sized iPad. One of these issues is real, the other is not.

Apple Is A Blue Chip And That’s A Problem How? I won’t address the article’s third issue, which was the loss of Steve Jobs, because it is what it is. No one can argue Steve Jobs was a brilliant mind, but nothing said about this would be productive… The author seems to assume that a fast growing company can’t pay a dividend or buy back shares. The truth is, Apple is being treated much worse than a blue chip stock.

Read more in the full article here.

Let’s all calm down and get some perspective on Apple

“While Apple’s market cap is mind-blowing at nearly a half a billion dollars, they have ample earnings to support it,” Greg Satell writes for Forbes. “What’s more, with average forward P/E ratios for the S&P 500 running somewhere between 14 and 15 (depending on who’s estimating it), the stock looks positively like a steal.”

“With a commanding presence in the fast growing smartphone and tablet categories, why would you pay 50% more for the earnings of an average company than you would for Apple (or some of the other companies on the list for that matter)?” Satell writes. “Moreover, a lot of people (like me, for instance) would find it hard to break away from the Apple ecosystem, which gives them somewhat of a protected consumer base.”

Satell writes, “Apple remains a great company, but the future is always uncertain… They have great challenges ahead and great assets with which to meet them.”

Read more in the full article here.

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U.S. wealthy dump assets amid ‘fiscal cliff’ worries

“For many of the wealthy, 2012 is becoming a good year to sell,” Robert Frank reports for CNBC. “They’re worried about the ‘fiscal cliff,’ which is when tax cuts expire and spending cuts are set to go into effect at the end of the year.”

“Fearing an increase in capital gains and dividend taxes, many of the rich are unloading stocks, businesses and homes before the end of the year,” Frank reports. “Wealth advisors say that with capital-gains taxes potentially going to 25 percent from 15 percent, and other possible increases in the dividend tax, estate tax and other taxes, many clients are selling now to save millions in taxes. ‘Under almost any scenario, it makes sense to take the gains this year,’ said Gregory Curtis, chairman and managing director of Greycourt & Co. ‘Clients aren’t selling willy nilly. But if they can and they have a huge gain, they’re selling now.’”

“If the Bush-era tax cuts expire, taxes on capital gains would revert back to its previous rate of 20 percent from its current 15 percent. Another 5 percent may be added from health-care levies and changes in itemized deductions, bringing the rate to 25 percent for many high earners. Taxes on dividends could go from 15 percent to over 43 percent. And the estate tax could go from 35 percent on estates worth more than $5 million to 55 percent on estates over $1 million,” Frank reports. “As a result, the wealthy are taking a close look at all of their assets to see what could or should be sold off now to avoid potentially higher taxes next year.”

Frank reports, “The most noticeable sell-off has been in stocks. Wealth managers many of their clients who have large gains on stocks are selling them now, or selling them or buying them back again to create a higher basis (and thus a lower tax bill later).

Read more in the full article here.

[Thanks to MacDailyNews readers too numerous to mention individually for the heads up.]

Analyst: Missed the Apple rally over the past year? Here’s your second chance

“Apple’s bear-territory brushes are clearly immaterial to Topeka Capital analyst Brian White, who reiterated a price target on the stock [$1,111] on Thursday that is more than double current trading levels,” Aabha Rathee reports for Wall Street Cheat Sheet. “White said the current trend simply represented a correction. ‘Similar to other corrections in Apple’s stock, the fears in the back of investors minds come to the forefront and the bear stories gain credence,’ White wrote in a note to clients on Thursday. ‘We have heard it before, we’re hearing it now and we expect to hear it again in the future. However, these concerns have proven dead wrong over the years and based on the product lineup at Apple, we believe they will be dead wrong in the foreseeable future.’”

Rathee reports, “White points out that the drop is similar to three other corrections seen by Apple in the past 13 months – falling 16 percent from September through October last year, 15 percent from October through November 2011, and 19 percent in April to May this year… He also said that tax-related selling was hurting the stock price, with investors preparing for the upcoming fiscal cliff by selling now. Taxes on investment returns and dividends are set to go up at the start of 2013 unless the government works to prevent the automatic switch.”

Rathee reports, “However, heading into the traditionally positive holiday season, Apple was likely to recover fast, White said, adding that this was an opportunity to buy. ‘We believe that those investors that have missed the Apple rally over the past year are presented with a very attractive entry point heading into the strong holiday news season,’ he wrote.”

Read more in the full article here.

[Thanks to MacDailyNews Reader "Fred Mertz" for the heads up.]

Analysts cut Apple price targets on company’s weak margin outlook

“At least three brokerages cut their price targets on Apple Inc by up to $50 a share after the iPhone maker surprised analysts by forecasting lower gross margins for the current quarter,” Supantha Mukherjee reports for Reuters. “For the December quarter, Apple forecast revenue of $52 billion, below estimates of $55 billion, according to Thomson Reuters I/B/E/S. It expects margins of 36 percent, far lower than analysts’ expectations of 43 percent.”

“Apple’s forecast decline in gross margin, even assuming it was deliberately aiming low, still pointed to an unusual decline, Evercore Partners analysts Rob Cihra and Edison Yu said in a research note. Evercore cut its price target on the stock to $775 from $800,” Mukherjee reports. “Nomura Equity Research said it expected production costs to rise in the current quarter, after Apple redesigned so many of its products at once. ‘The iPhone 5, iPod Touch, iPod nano, iPad mini and iMac all feature new form factors and our checks with the supply chain indicate that many of these are very complex to manufacture and are likely resulting in reduced production efficiencies,’ Nomura analysts said in a note as they lowered their price target to $660 from $710.”

Mukherjee reports, “Apple said it expects 80 percent of revenue in the current quarter to come from new products but did not increase the product prices to offset higher costs and maintain its margins. Analysts, however, expect gross margins to recover by June next year as rising volumes trim manufacturing and component costs. When the iPhone 4 was launched, Apple suffered a 480 basis point decline in corporate gross margins but it recovered entirely within two quarters, Raymond James analyst Tavis McCourt said. He cut his price target on the stock by $30 to $700.”

Read more in the full article here.

MacDailyNews Take: New products cost more to make initially and Apple expects 80% of revenue to come from brand new products, hence the company’s margin guidance. Nothing could be less mysterious. There’s no reason to cut 12-month price targets on Apple Inc.

Related article:
Apple beats Street on revenue, misses on EPS – October 25, 2012

Should technology businesses float on the stock exchange?

If tech start ups have shown us anything, it has proven that the stock exchange is their best friend. Tech companies like Google, Groupon and Facebook have all decided to float on the stock exchange and this has changed the business landscape. Online fast cash loans are used by many people who start businesses and they could even be a capital platform for your tech start up if you decide to go down that route. Whether you decide to fund your tech business with cash or loans, a stock exchange float is an excellent option.

Why tech investors like stock exchange floats

• It releases cash for investors: Luckily, when a tech company decides to do an initial public offering, another name for a stock exchange float, this means that there can be a lot of cash released which can also be done by no fax payday loans. Investors of any tech company want to know that they can get their money back whether this is by dividends or stock market flotations.
• They give tech companies prestige: The majority of tech companies, even established brands like Apple and Microsoft, want to have prestige from the business community. A stock exchange float can give tech companies instant prestige because it means they are involved in the grander scheme of the business community.
• They make tech companies more visible to the general public: This is an important element of stock exchange floats that most techies need to recognise. If your tech company is geared towards consumers in the same way that Apple sells tech products, you will instantly be more visible among the general public.

A technology business should think about the pros and cons of going on the stock exchange. Increased public scrutiny also means that revenue earnings need to be released for shareholders. This makes stock exchange floats hard for some tech companies who prefer to keep some information private. Have big dreams and aspirations for yourself if you plan to be the next superstar tech company that gets to float on the stock exchange just like how Facebook did earlier this year.

The 3rd dangerous sign about Apple’s stock

“Back in March when Apple’s stock was heading for new all-time highs, I did write about a dangerous sign for the stock, namely a wave of robust forecasts that called for the stock to reach $800, $900, or even $1000-some of these calls were made here at Forbes.com,” Panos Mourdoukoutas writes for Forbes.

“In July, after Apple missed on earnings expectations, I did write about another dangerous sign: A wave of justifications of the miss that re-assured investors that Apple’s fundamentals are intact, and that the stock will head north soon-after the iPhone 5 release,” Mourdoukoutas writes. “Now, with the iPhone 5 release around the corner and the stock trading near all-time highs, the buzz is about Apples contribution to the US GDP. Such buzz isn’t healthy for the stock. It focuses on the noise, not the message.”

Read more in the full article here.

MacDailyNews Take: Mourdoukoutas is Greek for “ghoulishly misconstrue.”