Apple Inc (AAPL)

(A Top Pick August 4, 2017. Up 20%). His model price is $216 and Buffet apparently buys it every day. If he owned it now, he would certainly keep it.

It pays a nice growing dividend. They will continue to return capital to shareholders. The main reason is the eco system of the users. It is quite defensive. They have recurring revenue. At the flick of a switch they can talk to the world about their products. It has done well but is not expensive.

Facebook or Apple? Apple's become like a regular stock, not as crazy as it used to be. The sky's the limit with Facebook with so many users. He'd choose Facebook. It's got plenty of upside.

He likes the company, based on Warren Buffet’s thinking. He sees their service fee structure providing steady revenue growth for years to come. Their ROE makes this a reasonably priced company. He will continue to hold it.

They are looking to double the service component of their business: If they can get customers into their infrastructure, those customers will stay there. The iPhone X was the best selling product they had and there are rumours of a lower price phone with similar capabilities coming soon. The company trades at good valuations and offers a dividend and buybacks. (Analysts’ price target is $196.94)

It is a microcosm of the S&P 500. It has had a tendency of peaking out at 5.5 times its book value. It usually sinks back 15-20% of its trading value when it hits here. He expected this but this time it did not happen. AAPL-Q has been trying to push higher but every time it gets there it gets pushed down. One thing that is interesting is that if you look at the slope of the growth of AAPL-Q, It was growing aggressively until 2012 and then they started to buy back shares and the growth of the company slowed considerably. Most interesting is that the rate of earnings growth has also slowed down as it has for many other similar companies that have bought back stock. This move to buy back stock is damaging to shareholders. If the company is not reinvesting, the growth slows. They wasted shareholders' money with these buybacks. The ceiling is $161 right now. The book value will go down. If we ever get into a market correction then this stock will have a good one.

He likes it. Service revenues and other parts of the business are ticking up. It's a dominant brand, with a dominant phone. He wouldn't be surprised if the Apple Watch picked up its sales. They're great at executing the brand. It trades at only 13x earnings. They are gushing so much cash, too. A little concerned that this has run so far, so fast. But there is growth here.

He would continue to hold this stock as they are doing everything well. They announced a $100 million share buyback. They put up increased iPhone X sales figures and sees it as the gateway into new tech with augmented reality.

They have a massive amount of cash, repatriating a lot of it, and are doing a huge share buyback. They project strong growth in their services segment. Caveat: iPhones are still over 60% of what they make--how sustainable is this? Overall, you can do a lot worse than Apple. They've executed very well this past qurater. It won't hurt to own Apple.

There hasn’t been a lot of innovation lately. They have their hands in augmented reality. The services business is the really exciting part with $9 billion in revenues the last quarter with very high margins. iPhones margins still strong. (Analysts’ price target is $194.00)

The chart is showing a bit of weakness. Not a bad chart. It's been pausing recently, consolidating, or maybe still in its uptrend. All the FANGs will be range-bound in the summer and work out their excesses from their recent (overbought) runs. He's long-term bullish on Apple though.

There's a lot of negativity about Apple now. He loves their products, but his Apple and iCloud mail is buggy. The point is, a lot of Apple's user interfaces are dragging their heels--they aren't improving. They can't compete with Alexa, for
instance. He's thinking of switching to other (non-Apple) apps like Spotify. Not a fan of this stock.

(A Top Pick July 11/17 Up 15%) He still likes it although it struggles. His model price is coming down as people worry about future earnings. A new iPhone X is $1800 in Canada. He would not be a seller yet.

This is a great business. It often pays to hang on to a great business when the stock drops a little. Apple is transitioning from being a pure hardware business into more software services. This will take time and lead to more stable cash flow. Higher yields tend to drive multiples down. This is especially significant for tech stocks, because they have such high multiples at this time.

He would buy it here for the long term. Shipments from a Taiwan producer to Apple were rumoured to be lower, which has spooked the market at bit. He expects a bottom to the price pretty soon. He expects a dividend increase soon. It is at the 200 day moving average support as well.