Apple Inc (AAPL)

An amazing, incredible success story. He doesn’t own this because the iPhone accounts for about 55% of revenues. Samsung (005930-KRX) is spending a ton of money to come up with competing products, as is Google (GOOGL-Q). When you have so much of your company based on a single product with the company priced to perfection, that implies risk so he looks elsewhere.

What price would you pay for this? This has been a fine performer. The challenge you have buying a substantial holding, is a little problematic because of how fast the company has grown. The market in many cases is pricing in the continued growth, the capital repatriation story. In the next 3-5 years, the company is going to run into the challenge of how much further it can grow. At these levels, he thinks you are fine because the US tax issue is going to be carried.

An inexpensive company. Filled with cash, but has lots of interesting catalysts. Their recent iPhone 10 is really interesting, as it gives them the only true integrated platform for augmented reality, which could turn out to be much bigger than people think. Margins are strong when looking at services, and is growing very rapidly.

This has really outperformed the market over the last year or so. Product launches are a big part of it. Things just shift so quickly in this space that it is not something she is participating in.

(A Past Top Pick Jan 30/17, Up 45%) There is lots of headline news regarding this company. People are willing to spend a lot of money on cell phones. Phone debt is one of the highest growing areas of consumer debt. AAPL-Q are a leader in their arena.

Earnings came out today and were pretty incredible. They beat on every basic number. Not an expensive stock, trading at 15X earnings. If the tax deal goes through, they get the upside on bringing back a bunch of money. Has a very strong ecosystem, so people tend to stay with them.

(A Top Pick June 22/16. Up 79%.) A year ago, everyone was convinced the company was not going to be able to come up with anything innovative anymore. Apple today is a very different business than it was 8 years ago. If you are expecting it to behave the same way that it was, it is not the same business. They have a lot of cash. Sold it because of how much it appreciated. It became a little expensive. He would like to buy back in as some point.

It is quite mature in the smart phone industry. But over the long term they would not be a good compounder. Their big growth is behind them.

Up a little less than 40% for the year. Has done fabulously well because they’ve convinced consumers their product is the product to have. The concern is that there is nothing they make, that somebody else can’t make at half the price. The history of consumer electronic companies is not very good.

(Market Call Minute.) You are making a bet here on augmented future reality, which is what they have done with their phones.

His model price is $200.78, a 26% upside. They’ll be reporting next week and what you will get is more stock buyback. A lot of people are worried about the new iPhone, but all the iPhone addicts are going to have to upgrade. Dividend yield of 1.6%. (Analysts’ price target is $180.)

Attractively priced. Whether it comes out in November, December or whenever, they are going to sell a lot of iPhone 10s. Some analysts say they could sell as high as 270 million phones, which would be 20% more than their biggest phone sale. Has a ton of cash and are going to be a big beneficiary of tax repatriation, if that happens, with tax reform. At some point, he expects they will start putting that cash to work with either a massive buyback or massive dividend increase, etc. Dividend yield of 1.6%. (Analysts’ price target is $180.)

Focuses on larger companies that have sustainable earnings drive with good moats around their franchise. This company is definitely one of those. At the same time, there is a product cycle to this company. When that happens, it typically happens after a larger product launch. This one is in an interesting situation right now. What they’ve opened up has a real chance of being game changing with real legs to it. However, it is going to take time. The iPhone 10 is selling at $1000 and up, and getting to a price point that is prohibitive for the average consumer, and is likely going to be bifurcating the market into a high and low end. The company has lots of runway left in the longer-term. Right now, you need to give it a little time for what seems to be a pretty seismic shift.

From a valuation perspective, this is not expensive. Pays a nice dividend of 1.4%. Trading at 15X earnings. The stock ran up into their product announcement, and then pulled back. If you have a longer-term view, you look to buy the stock in this area. It very rarely pulls back substantially. They are coming into a very strong time because of Christmas.

This keeps you in the eco system, which is extremely profitable for them. The apps and the music side is keeping you in there. The iPhone 8 and iPhone X should be positive heading into the holiday season. Also, it is not trading at an outrageous multiple. Dividend yield of 1.6%. (Analysts’ price target is $180.)