Apple Inc (AAPL)

The valuation of Visa and Mastercard has been elevated, but the growth has supported it. AmEx has the cheaper valuation; they benefit from international travel. He owns a little Visa. The future of payments processing? It's Apple Pay, which kids use through their phones. The sector has a lot of moving parts and competition, so it's hard to say where it's going.

Why did this sell off this month? Sure, they have no new phone, but the service revenue was enough to keep things steady. It's insane that shares are down 22 points from its high. The Vision Pro will be a good seller. How can sellers be so obtuse? Partially blame the analysts for hyping this stock in the $190s and encouraging all to bet on the quarter. When the new phone comes out, the sellers will look at this moment and kick themselves.

MSFT is a must-own with the AI themes, but right now its PEG is 1.4x. AAPL is another must-own, but pricier at 2.7x. Both are all over the AI themes. He wouldn't trim either.

He disagrees with those who sold shares after their last report. Sellers felt there was no growth in the reported quarter, but he notes that that was not an important quarter for Apple. There wasn't a new iPhone. The new phone will matter and he predicts it will sell great.

Tech sector setting up for year-end rally.
Recent share pullback presenting a good time to buy.
Expecting further growth.
Fundamentally one of the best businesses in the world.
Extraction of further subscription value from user base will be main company goal.

It isn't moving the market today, but the Goldilocks' job report is. Nobody expected a blowout quarter from Apple and they didn't deliver one. It trades at a premium because it's a cash cow, buybacks a lot of shares ($20 billion) and it's a global brand. Re: growth, Apple depends on the telcos who subsidize the purchases of Apple phones. Suppose telcos stop? Also, the phone upgrade cycles have been lengthened. What are Apple's new products to drive sales? Not the goggles. True, Apple is fine and predictable.

Operating margins came in 3x better than expectations. There were strong results in this report and investors have been waiting a long time for that. Earnings have been suppressed by all their reinvestments and this will continue. Amazon won't be greatly impacted by moves in interest rates, though the sector has. This will rebound when we end the rate-hiking cycle--and we're near that. Amazon has more growth potential than Apple. Despite its size, Amazon still has only a small portion of global sales. Apple still has growth in services, emerging markets, but the installed base of users is already enormous at 2 billion. Apple is more of a maturing company, and that's okay; Apple is predictable. Apple trades at a high PE of 30x, but that isn't sustainable for the next several years.

It trades at 30x PE, the street sees EPS growth of 9.9% annually, and a PEG ratio of 30. Not a terrible stock and it's heavily weighted in index funds, which helps. If Apple returns 7-8% annually going forward, the street will be disappointed. To gain outsize returns, the street has to look elsewhere. Apple has huge cash flow and continues to buyback shares though.

For growth, the street sees Apple as a staple that commands pricing power. Apple couldn't meet demand for the 14 Pro, so the price of the 15 Pro will be higher. The company has levers to pull. For years, Amazon spent too much money to fuel growth, but that limited margins. Any company has to spend money on AI. Overall, Amazon is in a Goldilocks period: they will benefit from existing spending/investments, and they will improve margins for the next few quarters, but spending will resume again. Apple hasn't pulled those levers yet, but the street is giving it a premium, and demand for products is not inelastic. Watch demand in the next 2-3 replacement cycles.

Does Tim Cook ever disappoint at earnings? The company rarely does. She expects another consistent quarter.

Up 50% this year. Produces a galaxy of great products, a fabulous service revenue stream, and today announced it will launch an AI program. This pushed shares to a new high.

A tough call, because he always says buy Apple and don't trade it. But it's important to have portfolio discipline, so yes trim your holding if it is large.

Has risen on an expanded multiple, which isn't the greatest thing, pushing 30x earnings. Recurring services have become a bigger piece of its business. 93% loyalty rate. Share buybacks have been accretive.

Apple enjoys a lot of growth in China, but is losing a lot of its weight in the S&P (along with 6 other megatech names). 

Owns, but is underweight, but wouldn't add to it. The PE is too high compared to the lower-PE cyclicals.