Apple Inc (AAPL)

Earnings are coming out on Monday and there is a lot to be cautious about when earnings are coming out. This stock can be a bit weak following earnings. This is a growth story and it is hard to find periods of negative strength for it. Technically it is consolidating right now and forming a bit of a triangle, so you are waiting to see it breakout. There is a developers’ conference coming up, and that is where investors get really excited into June, so that might be the time to pick it up on the cheap.

Believes the biggest theme in this market is consumer globally. This is probably the greatest consumer product company on the planet. Very inexpensive trading at 13/14 X earnings. IPhone 6 sales, in the most recent quarter, had only about 15% going to current iPhone users, meaning they are taking market share from everyone. Their service business is 10% of revenues now. Dividend yield of 1.48%.

(A Top Pick April 14/14. Up 73.52%.) Sold some of his holdings in order to get his weighting down to 5% of his portfolio. This remains an exceptionally exciting business to own. You can Buy at these prices. A well-managed company that is capable of creating new product categories and attracting intelligent people to work for them.

Good companies that have high ROE’s and generate lots of free cash flow with great branded products are going to grow. Thinks they are going to earn $8.40 this year and well over $9 next year. Add in the cash balance and trading at 10 or 11 times earnings, it may be the best company in the world. Dividend yield of 1.47%.

Because the market has been so frothy, based on the free money, he would wait for a pullback in this as well as in most stocks.

With the amount of cash they have, there is a cushion to see dividend raises continuing to come forth. They have really executed on all fronts. Their foreign expansion of smart phones is continuing. Last quarter, sales in China were up 70% year-over-year. They still have a very small market share in Asia, so there is further upside potential. They are continuing to innovate which is important for the future.

Looking at the seasonals, this does have some weakness in June, a little bit of weakness in January and December, but the rest of the months are very positive. The most positive month is April. He still likes the stock and it is still trading at a reasonable valuation. Lots of cash on the books and lots of opportunity to continue to do well. Trading at a PEG ratio of .9, which is a pretty decent valuation.

Trading well below market multiple, yet it is growing at a faster rate. That tells him that over time it will make that up, and go to levels that will take it to a valuation more in sync with the market. This is not overvalued and has some room in front of it.

He thought APPL would get creamed at some point but overall it has continued to go up. Tech companies do get beaten down at some point. You have to keep coming back with sexy products. He thinks it is crazy that they took on more debt when they had so much money in the kitty. Tech companies do get beaten up at some point.

Stock vs. Stock. BRK.B-N vs. AAPL-Q. The actual price should have nothing to do with it. If you want to hold it 5-10 years then choose BRK-N. In Apple’s space, they take turns dominating the space, so he can’t be sure of it for 5 to 10 years. Buffet may not be around in 10 years but he has good people running the company.

There has never been enough value for him to buy it, but if you own it, there’s no reason to sell it. The watch is the first non-Steve Jobs product.

He believes this still has legs. Tim Cook has done an excellent job at being able to manage this company as it goes through its maturity stage. The initiation of a dividend is proof of the metamorphosis that is taking place. He wouldn’t buy this for its dividend, but for its growing dividend. The cash flow they generate is strong, to maintain an increasing dividend over time. Trading at about 13X PE, which is very reasonable in this environment.

Definitely overbought. If you draw a 200 day moving average on the chart, and if it is more than 10% over the 200 day moving average, it is probably time for a pullback. However, this is all within the healthy uptrend. A rule of thumb is to watch the 200 day moving average, and if something arcs too high (10%) off that, it might be due for a pullback. After the pullback, that might be a good time to enter the stock.

(A Top Pick April 14/14. Up 70.56%.) Very excited about the applications that the iWatch can do from a health and payment perspective. He thinks this whole connected theme is going to be very big longer-term.

None of us know what the real impact of the new iWatch will be. This company has always been good with the consumer devices. They are very smart about it in the way they package it. He thinks it will be a win. He can’t see any downside to it at this point.