Apple Inc (AAPL)

There are a number of stocks like this one that have an expectational set up where management delivered, but expectations were higher. They have reset investor expectations. Give it a bit of time. He does not believe in averaging down.

It is only the 3^rd time in 10 years it broke the 200 day (back in August). Each advance since ’06 has made less as a percent of stock price. The advances in AAPL-Q are shrinking. The market is saying the honeymoon is over. He thinks it will rally up to the 200 day.

He has not owned it because he is a value investor. It is not a value stock. It is becoming more value than in the past and he might look at it in the future, however he feels it is past its `best before date`. The watch is the only product not initiated by Steve Jobs.

Historically not a good time to buy it just before a new product. This one includes China as well. The stock is not set up perfectly. It is not expensive and there is a mountain of cash, but this is not the time to own it.

Every stock has a sensitivity value to the index. The DOW is a horrible index. If AAPL-N’s share price is cut, it is so heavily weighted in the index that it impacts the index greatly. A utility stock, for example, will have a very low beta because it is not very related to the market index.

(A Top Pick Dec 12/14. Up 4.65%.) The magic of this company’s platforms is that they open up the platform to 3rd-party developers, and come up with products that people haven’t thought about that they want. This is undervalued compared to the S&P 500. Dividend yield of 1.83%.

Has a significant amount of cash on the balance sheet. Valuation is trading low, but right now they are in somewhat of a limbo phase. There is not a great deal of excitement with regards to any of the new ventures they are going into. Over the long-term, you could see incremental increases in their dividend. There is a big CapX spend coming up, and most of the analysts don’t know what it is in respect to. This is cheap in absolute terms.

Continues to perform well. Trading at 10X PE ex-cash. A pretty good valuation for this company. IPhone continues to impress. Gaming console, a car and all those types of things are catalysts for them. He doesn’t see selling this anytime soon.

(A Top Pick Aug 15/14. Up 16.56%.) His model price is $156.53, a 40% upside. There is a lot of value. This is all about the iPhone, which is 70% of their earnings. Thinks it gets volatile here because the earnings look a little shaky. Doesn’t think the iWatch is even close to being a hit. AppleMusic is a dud. The company is going to have to drive hard to maintain its valuation. If there is any disappointment whatsoever, this goes back to $85 in a hurry. He would be interested at $85 for a trade.

Despite the huge run up and share price over the last 5 years, it is still cheap. Scores in the top 10% for him on value. Has a 41% ROE. Trading at about 12X earnings. Pristine balance sheet.

A great company. Valuations are very attractive, especially if you strip out the cash on their balance sheet, which they can use to buy back stock and increase their dividend. You are going into relatively tough comps in the 2^nd half of 2015. However, there is still a huge iPhone user base that hasn’t upgraded, so that could potentially lift the shares in 2016. Thinks concerns of a slowdown in China are overblown.

Seasonality tends to be positive from October to January each year. This is the time of year when the stock tends to come under pressure. Technically it is starting to show signs of bottoming, but we are not into the period of seasonal strength as yet. They have a lot of sales around Christmas, and that is the time when people are buying their products, and that is when the strongest anticipation occurs in the stock. Be patient. You will have an opportunity to buy this on any kind of weakness between now and the middle of October, for a very good seasonal trade right through January of next year.

A good example of a really well-run business. Sold off with the market. This is a great company with an amazing brand loyalty. Trading at 8X earnings after backing out the cash. This company is going to do just fine, regardless of what happens in China. Dividend yield of 1.87%.

Couldn’t resist using this as a Top Pick with the price in the $112 area. Stock sold off because of fears of China and their exposure, which is not insignificant. CEO commented this week that they are expanding iPhone sales in China. The Apple App Store in China had its best 2 weeks ever. All those concerns of China may be a little bit overblown. Stock is trading at 11.5X earnings and still the dominant player on the smart phone. IPhone revenues are expected to increase again this quarter. Dividend yield of 1.84%.

(A Top Pick Sept 16/14. Up 14.24%.) Sold half of his holdings when it reached $128. This is a fantastic company. It’s the ecosystem they have developed. The durability of being able to develop technology solutions that make their customers want to be customers for long, long periods of time.