Gerald Allaye-Chan Apple Inc AAPL-Q TOP PICK May 29, 2009

The ones that are nice to King Trump. He'd hope that TSLA and AAPL would escape additional tariffs on China. 

Except for TSLA, the other Mag 6 have come down to very reasonable valuations. For example, AMZN's trading at a discount to WMT, which makes no sense. GOOG is trading at 19x earnings. Thinks AAPL growth will be double digit. This is your chance to buy quality companies at reasonable valuations. See his Top Picks.

Down 19% from recent highs. PEG ratio is 2x. Discounted due to concerns over momentum in China, but he thinks that's overplayed. If he had to choose today, he'd choose AMZN because it's a bit cheaper.

Bears don't like Apple here. Now trades at 30x PE. But Apple has 1.3 billion users. They will have a foldable phone next year.

With the drop in the stock price, he's finally looking at it. One issue is China's reaction to the US tariffs; is it going to put pressure on government employees to not buy iPhones? Consumer sentiment is just temporary.

Own, don't trade this Is -30% from highs, including a sharp sell-off today. Buying into weakness has gotten you hurt, so stand back and wait a bit. Tariffs will raise the price of an iPhone from $550 to $850, though costs could be lower because of manufacturing shifting to India. Apple is stuck in a trade war between the US and China. A tough call. 

Tech leader, but beaten up badly due to tariff concerns. Down ~30% from recent highs. Iconic brand, strong cashflow, loyal customer base. Giant revenue generator. Services segment has very high margins, is expanding, with very stable revenue stream. That will cushion all the near-term uncertainties. Pricing power. 

Actively diversifying production outside of China. Wearables are part of the growthier area of the business. Right at the 200-week MA of long-term support. Pretty good medium- and long-term entry point. Solid balance sheet, disciplined capital allocation. Steady 15% earnings growth going forward. Yield is 0.52%.

Markets are down today from Trump hectoring Jay Powell badly. If this leads to a constitutional crisis, you will need some cash. He always believed that the President can't fire the Fed Chair. This talk and tariffs have done enormous damage to stocks. Losses could worsen if Trump keeps trashing Powell without achieving a good tariff deal. Washington is incredibly biased against Nvidia and Apple, two excellent companies. Trump is more interested in cutting off China than advancing America's interests. This makes NVDA a hard stock to own, though not as bad as Apple. Apple makes the best consumer products on Earth, and they will eventually get AI right. But Apple makes a lot of products in China. The market could get worse, but at some point the pain will get so bad that Trump will back its most punitive measures. There has to be some sanity here. A strong Apple with business in China is in America's interest, while Nvidia is worth supporting. It doesn't have to be this way!

If the tariff situation simmers down (and it should come the summer), the Mag 7 name that will be the big beneficiary will be AAPL.

They report Thursday. Some will say these will be Apple's last good numbers before tariffs, but he isn't concerned. He is confident they can work their way out of any problem involving China, but it will take time and money. He expects the CEO to announce plan that involves India.