Apple Inc (AAPL)

They are gaining traction in the lower income emerging market countries, so the lower cost phones in the high growth regions strategy is going well. They are continuing to innovate. With Apple Pay and iWatch coming out he doesn’t know when it will be profitable, but they are continuing to innovate. He likes that they have $120 billion in cash and they can’t spend it fast enough.

(A Top Pick Jan 29/14. Up 52.46%.) Trading at 13.8X what he expects to earn by September 2015. The iPhone 6 was probably one of the most successful product launches of all time. A very high margin piece of business. The mix for this company is very favourable, because the iPhone is a very high margin product, and as it becomes a larger and larger percentage of the total, their gross margins of the company will rise. He expects over 40% of gross margin will lead to a surprise on the upside in terms of earnings. Producing an enormous amount of cash and most of it they are banking. They really can’t keep up with the amount of cash coming in, although they are paying a very fine dividend and are buying back about 6% of the float per year. The iWatch and the ApplePay are the innovation side. Yield of 1.76%.

Likes this. He thinks 2015 is going to be their greatest year, and hopefully 2016 will be even better. Sitting on an enormous amount of cash. The best branded company in the world. Thinks of this as more of a consumer company rather than a technology company.

It was a great company in 2008-09. But it fell well over 50% back then. The drop in 2012 was about competition and they turned it around. He would look to take money off the table and then buy more at the $80-90 area, or write a call on it.

He sees it as a software business that sells hardware. There are only two ecosystems. IOS and Android. Once you are hooked into one, you stay with it. Will generate a tremendous amount of excess cash this year. He expects it to continue. We are in the midst of an upgrade cycle and will continue into 2015.

Sell McDonalds (MCD-N) to buy Apple (AAPL-Q)? Apple is a product story, and as with all product stories, if you miss a product cycle it can lead to big problems. Expectations around this company are such that you really don’t know if this is going to go much higher. Not sure how much more penetration they can get outside of developed economies, on a subsidized basis. Great company, but don’t confuse a great investment with a great product.

He likes it here. If someone asked what sector he would stick with, it would be US technology. There is tremendous growth here. Likes their product lines, which he thinks have not been monetized fully yet. Valuation is less then the market multiple, and they are sitting on a huge amount of cash. Relatively cheap.

It does have pullbacks once in a while, but the overall look is pretty good. Nice looking chart. The three-year chart shows a cup formation followed by a breakout this year and currently in an uptrend. Currently pulling back to the trend line, but basically this stock is looking pretty bullish.

Continues to think this is a good company. Changed considerably from when he 1^st purchased 7-8 years ago. The iPhone 6 is their newest product, but there are other things coming down the pipe, including the Apple watch, which he thinks will get more attention as it is launched. Also, ApplePay, which could redefine this company in the next 3-5 years. Trades at a very reasonable multiple of about 15X earnings. Ex-cash it would be considerably less than that. Still have about $150 billion cash globally. Since Steve Jobs, their capital allocation policy has changed dramatically and now they pay a very fine dividend as well as buying back a lot of stock. They buy back about 6% of the float per year. In China now and have just scratched the surface on their deal with China Mobile.

(A Top Pick Oct 14/14. Up 12.49%.) He is looking for about 20%-25% earnings growth for 2015. For 2015, we are probably going to see 20%-25% earnings growth year-over-year. The following year, it will probably be 10%-15%. A wildcard is how well the wearable category is going to do for them. Thinks there are some new categories coming. Yield of 1.7%.

This is maybe the year that Apple will peak out. The iPhone is 70% of their profits. They come out with imperfect products so that people will have a reason to upgrade. Samsung is always ahead of them. They held back on the larger screen and finally it came out in the iPhone 6, which will probably be the best selling product ever as it has the largest adoption rate. The next iPhone sales will not be as great. You might want to start getting out.

(A Top Pick Nov 28/13. Up 47.9%.) This is the biggest holding for his clients, and it is still a Buy. He takes out the cash and looks at what it is going to earn and wonders why he is paying a discount price for a premium company. It should trade at 20X earnings. Thinks it could be a $200 stock.

Don’t buy it at a record level. He has never owned it. One product almost generates 50% of their revenue and this bothers him. It is such a large company that at some point it will be harder and harder to grow. Thinks the Christmas season is already built into the stock price. The price may pull back at some point. Thinks they will not be able to innovate as much as people think.

Looking at technology, it has become a bifurcated market. Some of them are just getting smoked and some are struggling, and yet you see this one trading at a relatively low multiple. It really has the best ecosystem in technology. There are well over 50% margins on the iPhone. Don’t know what their sales are yet officially, but there are rumours they are in the 60 million+ already. He thinks it is certainly worth north of $150 a share. Yield of 1.58%.

Not as good a value today as it was 6 months or a year ago. Got to a point where it was priced for extinction. There was no premium built into the stock for innovation. There was a period of time when the capital allocation policy was really not a good one. A lot of that has changed. Also, they are now in China. The latest analysis says that they could do over 70 million units of the iPhone 6, a high-margin product. That will put their gross margin into the 40% range. At this price, it is trading at about 16X earnings, and if you net out the cash you are down into 13X. Still not expensive. Have a policy of capital allocation where they return to the shareholders the equivalent of about 8% of their market cap per year, both in dividends and buybacks. Feels the market is starting to recognize that this company can still innovate.