The Bulls and the Bears About Apple Inc. (AAPL)

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Apple Inc.’s (NASDAQ:AAPL) second-quarter performance goes without saying, was impressive, according to Al Frank Asset Management CIO John Buckingham taking into consideration the company generated $7.7 billion in cash flow. The company has also been returning maximum value to its shareholders in the past through dividends and stock buybacks, a trend that should continue with bolstered cash flow.

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The credit markets have also been in favor of Apple Inc. (NASDAQ:AAPL), seen by the fact that the company is in a position to borrow at low-interest rates. “You’ve got to give this company some props for generating substantial cash flow and of course, they are using that cash flow to buy back stock [and]to pay that divided. Now happily, the credit markets are helping them out by being able to go out and borrow at very low rates,” said John Buckingham.

Buckingham in an interview on CNBC  also noted the fact that Apple Inc. (NASDAQ:AAPL) has appreciated in terms of earnings over the past few years while also commanding an impressive PE ratio of 15, awaiting to see the impact of its new line of products especially the iPhone 6.

Apple Inc. (NASDAQ:AAPL) has also had its fair share of challenges, according Research Director & Co-Founder of Insider Monkey, Ian Dogan, which if not addressed sooner than later could have a substantial effect on the company’s stock price. Dogan noted that Apple’s products as well as markets are constantly maturing, clearly shown by slow growth in iPad sales in the first half of the year. Mr. Dogan explained:

“The problem is their products are maturing, and some of its markets are maturing as well. For instance, iPad sales picked last year and during the first half of this year they went down by around 15%. That’s a huge number. 15% isn’t something that you just ignore.”

Another reason Dogan remains bearish on Apple Inc. (NASDAQ:AAPL) is the fact that its sales were up in China by 6%, but in America, sales only grew by 1%. Dogan was also of the opinion that Apple’s margins are not sustainable and might go down in the future. iPhone sales are expected to improve with the release of iPhone 6, according to the analyst but should again slip after one year of sales.

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1 Comment

  1. “I agree with the Chinese market growth….but in about a year or so you’re going to see decline in the iPhone sales as well”

    Nope.

    If you agree with the China growth and continuing aspirational appeal of iPhone, then you can’t ignore the sheer hugeness of the opportunity there. China Mobile alone with nearly 800M customers is just beginning its 4G upgrade project this year. They are on track to sell 100M phones to new 4G users in 2014 and so far “most of them are iPhones”.

    100M this year represents only 12% of their customer base which currently is confined to 2G service or worse. And that doesn’t even consider the other providers! The population of China is nearly 1.5B and there are more aspirational and affluent buyers there than then entire population of the USA.

    China will be a huge market for Apple forever!

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