Apple Inc (AAPL)

He does not think the Apple watch is the be all and end all. The last iPhone release was successful. He thinks Apple music will make incremental revenue. 11 times earnings.

The valuation on this is still very, very solid. Trading on a 13 X forward PE multiple with a 15% long-term growth rate. That puts it at a PEG ratio of 1.0%. Balance sheet is unbeatable with $94 billion in cash. That allowed them to do a $140 billion share buyback. Yield of 1.63%.

It is important to separate the outlook for the stock versus the company. They both have challenges. At the company level, it is no longer a fast growth company. The key areas where it makes its profits are pretty mature. It is hoping to develop new revenue lines through music streams, watches, etc. As the stock goes through the transition of being a very high growth company, to being a lower growth company, to being an average growth company you are going to get a rotation in their shareholder base. It is tough to see how the stock will do well over a sustained period of time.

(A Top Pick July 3/14. Up 36.87%.) His model price is $161.03, a 27% upside. $138 is a real barrier for them.

We are always encouraged by our stocks doing well, but the important thing is the underlying company and is it moving at the same rate of growth as the stock price. If it is, then we know that the metrics are basically staying the same or getting less expensive. This is a victim of its own success. The iPhone has been tremendously successful and is their high margin product. He would like to see a bigger pie and thinks we are seeing that as they are expanding their product base.

It is hard to argue with this company. The only negative is the law of large numbers. The question is, can they continue to grow given that they are such a massive company and generates such huge amounts of cash flow and earnings. Not that expensive a stock, and if you back out the cash, it is probably trading at 11 or 12 times earnings.

If you take away the exciting package, the shine and the glitter, this company has been operating on all fronts. The smart phone market in North America is saturated, and they are trying to grow in emerging markets. Globally 24% of the world uses smart phones today, so there is still lots of adoption that can take place. They continue to innovate and the new innovations are gaining traction. Dividend yield of 1.61%.

His single biggest position. They are in a product cycle upgrade. Incremental sales in iPhones are from other manufacture’s customers. He loves his iWatch. It is an inexpensive company. 39% return on equity. Their services business is the most profitable part of their business, such as iTunes or the monthly subscription to iCloud.

This has been enormously successful. The difficulty now is that it is the biggest company in the world by market cap and the actual rate of growth is slowing. If you have some profits, you might want to take some.

Has a model price of $162.95, a 25% upside. A year from now, he has a model price calculation at $175. He likes this company and would try to get it on a pullback.

(A Top Pick July 10/14. Up 37.1%.) This choice came down to the whole company and their suite of product offerings. He has taken some money off the table. This will continue to grow. Thinks it would be very hard to pull people away from their Apple products.

Not his kind of company. Has been thinking for years that it was overvalued, but it keeps on going up. It does share buybacks which makes no sense to him. They’ve taken on debt that also makes no sense to him. At some point he thinks they will have difficulties.

Thinks it will go higher. He does not know if the iWatch will be successful, however. He is more concerned about market risk in the back half of the year so he does not like to look at stock at all time highs. Don’t chase it here. Don’t put new money into it.

(A Top Pick April 10/14. Up 75.36%.) This still goes higher. Still a cheaply valued stock. Beat earnings again last week. The iWatch and Apple pay are going to be additive to earnings, and more importantly additive to the eco system.

(A Top Pick Oct 14/14. Up 32.6%.) This company is always going to go from a position that it is such a big company, people won’t believe it is going to grow any more. The iPhone 6 is a very specialized iPhone and is taking market share from other vendors. Dividend yield of 1.61%.