Notable in Warren Buffett's February annual letter to shareholders was that, for the first time, he singled out a particular stock as being a major pillar of the Berkshire Hathaway (BRK.B) conglomerate, notes Stephen Leeb, growth stock expert and editor of Investing Daily's The Complete Investor.

The stock was Apple (AAPL) — and Berkshire’s stake amounts to more than 5% of Apple shares. Apple’s ascendance in the Berkshire hierarchy reinforces our view that Apple shares continue to be a buy despite the relatively high PEG ratio (based on consensus estimates of growth).

Currently Apple’s expected 2021 P/E is near 30, which combined with projected growth below 10% translates into a PEG ratio of about 3. That would appear overvalued even in today’s environment of low interest rates and low inflation.

Other very large established IT companies have PEG ratios under 2.5 and on average below 2. What’s more, in his letter Buffett makes clear he expects bond yields to rise, a factor strongly associated with declining P/Es and PEG ratios on richly valued growth stocks.

But Apple is special. We could start with the latest quarterly report (for the period ended December), which, led by a 17% jump in iPhone sales, was a blowout on virtually every metric. Consensus Wall Street estimates had been about $1.40 a share; the actual number, $1.68, beat those estimates by 20%.

Company guidance points to a repeat performance in the March quarter. If you think that perhaps the pandemic made these results outliers, think again: In 2020, Apple grew by 16%.

If there was an important difference, it was that the latest figures reflected the first results for the iPhone 12, which in addition to the usual improvements, such as a better camera, was the first iPhone compatible with 5G.

We think that’s a big deal. While 5G is still in start-up mode in the U.S., in countries further advanced in 5G, notable among them China, iPhone sales rose by nearly 170%.

We can hear you thinking — China. What happens if the U.S. and China completely break off economic ties? First, if that happened Apple’s China sales would not even be Apple’s biggest worry.

After all, even after the recent surge, sales in China are still a smaller percentage of total sales than in 2018. Provided such a U.S-Sino breakup did not set off a geopolitical catastrophe, sales could easily be made up by the rest of the world, which is just embarking on 5G.

Moreover, Apple has about $200 billion in the bank, more than twice long-term debt. This gives the company a great deal of room to be both shareholder friendly — repurchasing its shares (which take it from Buffett would be a very good investment) — and pursuing other ventures.

Those ventures might include the much-rumored electric vehicle. EVs with semiautonomous driving features have much more in common with computer software and hardware than they do with the more than 99% of the world’s car fleet powered by internal combustion engines.

And if you worry that an Apple EV that debuts in 2025 (again, rumors) would be late to the party, realize that would be like fretting about being late when you’re the third guest to arrive at a party for 100 people.

Suffice it to say that 5G, EVs, and Apple could be an awesome threesome that your grandchildren will be talking about. We are raising our weighting of Apple by moving it into our highest-allocation low-risk category.

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