Apple: Major Concerns Overstated And More Than Priced In
by Christopher Bayliss
Introduction
For years, Apple (AAPL) has handsomely rewarded investors due to the company's consistent growth from a string of revolutionary inventions. The stock has plummeted recently; potential reasons for the drop include: recent margin declines, long term competition in primary markets, and inability to innovate. Due to these worries, investors may be overlooking the strength of Apple and its opportunities. Apple will likely take advantage of significant growth of smart devices across the globe. Apple has created an incredible brand name, and a uniquely integrated product line, which along with direct sales and leverage over producers, should allow it to maintain its profitability levels over the long run. Recent margin compression appears temporary because consumers are still willing to pay just as much for Apple products as they were before and increased gross costs were due to an inordinate amount of product ramp ups. These worries could be forgotten soon due to upcoming catalysts including potential product releases, margin stabilization, and deployment of the cash hoard. Apple is cheap from multiple perspectives, especially after separating the cash and the operating company. A very conservative DCF analysis illustrated a significant margin of safety with the potential for significant upside. Consequently, Apple represents the opportunity to buy a terrific business at a great price. read more »
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