Apple’s stock continued to dominate the news over the weekend, with Barron’s placing it on the top of its favorite 2013 stock list.
Barnes & Noble, BlackRock, General Dynamics, JPMorgan Chase, Marathon Petroleum, Novartis, Royal Dutch, Viacom B, and Western Digital also made it to the list.
Last year, Barron’s list yielded a 17 percent return compared to 12.6% of S&P500.
The author of the article, Andrew Bary, thinks recent investor concerns that have pushed Apple stock 23% below its recent high are minor -- and that the earnings growth should be understandable, given the company’s size.
“None of the recent concerns — lower margins, supply constraints, management changes, iPad competition, and iPhone 5 map fiasco -- are major," writes Bary. "It’s true that Apple’s earnings growth has slowed to a 23 % rate from more than 100% a year ago, but that’s understandable, given the company’s $156 Billion in annual sales.”
Last month, Barron’s run a cover story, which concluded that Apple is a better buy than Samsung Electronics. “But while Samsung may be the underdog, Apple is the more underappreciated stock. That gives Apple the edge in a bout between these two heavyweights—a winner not by knockout, but by decision.” Apple is further underappreciated when it is compared with another competitor in the smartphone and the tablet market, Google (NASDAQ:GOOG). Apple trades at a forward (Sept 2014) PE of 9.06, while Google’s at forward PE of 13.96 (Dec 31, 2013).
Apple’s (NASDAQ:AAPL) stock was on a big rebound on Monday after Barron's cover story was published, gaining 6 percent for the day.
Will the rally be repeated tomorrow?
It is hard to say. I would agree with Barron’s, however, that investor concerns over Apple’s future are overblown, at least for the time being. Investor sentiment seems to have swung from maximum optimism in September to maximum pessimism in November. And that’s a buying opportunity!
Also read:
What to Do With Apple’s Stock
Apple Did it Again!
7 Things that Make the Difference Between Marketing Dreams and Marketing Reality
Disclosure: Long on AAPL
