360° Coverage : Can Apple Double Again?

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Can Apple Double Again?

Mar 7 2014, 8:49am CST | by

Apple’s innovative products have created fervent brand loyalty among their customers. This, combined with the stock more than doubling since the beginning of 2010, from $205 then to $531 today, has...

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20 weeks ago

Can Apple Double Again?

Mar 7 2014, 8:49am CST | by

Apple’s innovative products have created fervent brand loyalty among their customers. This, combined with the stock more than doubling since the beginning of 2010, from $205 then to $531 today, has inspired equally impressive loyalty among its shareholders. There is no question that Apple is a great company and has been a great investment. But for those who currently own the stock or are considering of buying it today, the more significant question is, can Apple double again?

Since 2010, no one has been more right about Apple than Eugene Groysman. In October 2010, he was buying Apple at about $245 because he believed the iPad had the capability to push the stock to $300.  In November 2011, when Apple was trading at $380, Eugene told Forbes readers that Apple could reach $500 in 2012, which it did for the first time on February 24, 2012.  Last April, with the stock at $390, Eugene was rebuilding his position to make it a core holding. He has been consistently making the right calls about Apple for a long time now.

Let’s see what his projections for the stock are today.

Ken:  Eugene, with a market value close to $500 billion, Apple is already the most valuable company in the world. They need a big win just to maintain their current valuation, much less grow. It is going to take some extremely large wins to double their market cap. Is Apple is too big to double again? What do you think?

Eugene:  To me, it seems like Apple is looking for something big to acquire with all its cash. There has been speculation that they will buy Tesla, as well as possibly breaking into the cardiac medical device business.  Apple doesn’t believe they can do any wrong, so they are looking into industries big enough to move the needle for them. As I see it, however, the problem is that they don’t have an advantage in either the automotive or medical device industries.

Ken:   I don’t think Apple buying Tesla is a good sign. It feels like they are flailing. If they can’t do something smart with their cash, they should return it to shareholders.

Eugene:   I agree. I don’t think that Apple should make a big acquisition to get into the auto industry or the medical device business. The suggestion of it took me by surprise. Tesla does not make sense to me unless they are considering it as an investment only, rather than to gain control of the company. If Apple believes in Tesla and in its growth, they might see this as a way of putting their cash hoard to work.

Ken:  In my opinion, if it is just an investment, Apple should dividend the money and let the shareholders decide for themselves whether or not they want to invest in Tesla. Tim Cook should use great discretion in making this decision. Unless he can do something with the cash that Apple shareholders cannot do for themselves, I think it’s not the right call to make.

Eugene:   Agreed. I can see the medical device arena as an off shoot from their current devices much more so than I can see the connection to Tesla. Perhaps there is a role for Apple in monitoring medical devices, but not in manufacturing the devices themselves. Medtronic, Johnson & Johnson, and Boston Scientific are the big players in the cardiac medical devices business.  It is a highly-regulated business, and they are strong competitors with significant patent portfolios.

Ken:  So what is your conclusion about Apple’s prospects to double its market cap through the auto or medical device industries?

Eugene:  I really don’t see an opportunity for Apple to use its strengths to radically change the cardiac device business or the electric car business. Maybe they have a way to do it, but it is not yet clear to me, so I would not be willing to pay a premium for their future potential in either industry. At least not yet.

Ken:  Thank you, Eugene.

Eugene runs a core portfolio for our clients in which he uses fundamental analysis to find companies in every sector that offer above average risk/reward profiles. From May 9, 2003 through the end of 2013 his model portfolio has averaged 18.7% a year while the S&P 500 has averaged 8.8%.

Clients in our SMA program at Marketocracy own these stocks because they have allocated a portion of their account to Eugene’s model portfolio. Visit our website for more information about Eugene Groysman. You can view his top 5 holdings, learn more about his strategy, and track his progress with monthly Performance Insights emailed directly to you at the end of each month.

Disclosure: I am the portfolio manager for mutual and hedge funds advised by Marketocracy Capital Management, an SEC registered investment advisor. Before relying on the opinions expressed in this article, you should assume that Marketocracy, its affiliates, clients, and I have material financial interests in these stocks and may hold or trade them contrary to these opinions when, in our view, market conditions change.

Source: Forbes Business

 
Update
10

7 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

7 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken into by robbers. ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, Datuk Seri Hishammuddin Husse ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Sel ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

8 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 million in compensa ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

8 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Datuk Seri Mustapa Moha ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

8 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an al ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

8 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Bazaar ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

8 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara Damansara Skyway (Kidex) ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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