We remain positive on Apple stock going forward, just maybe more positive long term than short term. The stock is under pressure to some extent due to the expiration of the two year phone upgrade cycle which begins in late summer 2013. Apple needs a new phone to keep customers from at least considering the offerings from Samsung and HTC. We own a Samsung Galaxy Note Two and frankly it is an awesome piece of work. Apple's stubborn insistence it does not need a larger phone such as the Note Two is foolish. Maybe they need to check out the millions of these phones Samsung is selling. On the other hand Apple has the people and smarts to add tech to their current offerings and still demand higher margins on their machines such as the ipad due to it being the best out there.
Short term the analysts are pounding Apple for what we personally believe is Apple not performing up to their ridiculous price targets. Frankly those targets were crazy from the start especially the one by industry leader Goldman Sachs at $1000. So much for the so called smart money. Apple will continue to produce iphones, ipad, and ipods for customers who like their products and quality. They will continue to innovate, but maybe not as much.
In the end Apple will be paying a 3.0% dividend which is solidly better than any US Treasury and frankly safer due to their huge $144 billion dollar cash pile. Plus their dividend is not subject to rising interest rates either. We also like the idea of borrowing money to buy back stock since Apple should use their AAA credit while rates are low to make long term bets on the business. Apple remains a less than spectacular growth company with a nice payout and once the floor gets put in on the stock remains a buy in our opinion. You might not get rich on Apple going forward, but you will make money that is above average. Frankly for our purposes we like Apple now better than we have before.
As a trading vehicle it has reached our sweet spot. As a long term hold it is good as well.
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