Thursday, December 4, 2014

Apple (AAPL) 2014 Review

Apple is the world’s largest maker of PC’s and peripheral consumer products (iPod, iPad, iPhone) to business, consumer, education and government markets.  It has grown earnings at a 50%+ rate over the last five years and raised its dividend per share from $.38 in 2012 to $1.81 in 2014.  Return on equity has consistently been above 30%.  While APPL is unlikely to sustain that record over the long term, it nonetheless, should continue to grow at an above average pace because:

(1) strong iPhone sales, especially in the emerging markets,

(2) cost controls,

(3) acquisition of Beats Electronics,

(4) new product introductions,

(5) share buybacks.


(1) highly competitive industry,

(2) currency fluctuations.

Apple is rated A++ by Value Line, has a 19% debt to equity ratio and its stock yields approximately 1.8%.

     Statistical Summary

                 Stock      Dividend         Payout      # Increases  
                 Yield      Growth Rate     Ratio        Since 2012

AAPL         1.8%          13%               27%              2
Ind Ave      1.8              16*               25                NA 

                Debt/                      EPS Down       Net        Value Line
               Equity         ROE      Since 2004     Margin       Rating

AAPL        19%            31%            1               20%           A++
Ind Ave     24               16             NA               8             NA

 *many companies in AAPL industry do not pay a dividend.  


            Note: AAPL stock made great progress off its January 2009 low, quickly surpassing the downtrend off the December 2007 high (straight red line) and the November 2008 trading high (green line).  Long term, it is in an uptrend (blue lines).  Intermediate term it is in an uptrend (purple lines).  The wiggly red line is the 50 day moving average.  The Aggressive Growth Portfolio owns a 50% position in AAPL.  The upper boundary of its Buy Value Range is $105; the lower boundary of its Sell Half Range is $190.


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