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Top Picks 2016: Apple
01/25/2016 7:00 am EST
My Top Pick for growth investors in 2016 is among the bluest of the blue chips with a Value Line rating of A++, explains value investing specialist Russ Kaplan, editor of the Heartland Advisor.
When it comes to Apple (AAPL), there is a major conflict between investment analysts in their Wall Street skyscrapers and main street.
The analysts have been almost consistently negative when it comes to Apple. They always find some problem such as iPhone sales may not be all that good or there is going to be an economic slowdown in China.
Moving to main street we see a different story. Apple's earnings are growing and it is expected to earn probably more in 2016 than 2015. This translates into a return on equity of 46% which is among the highest among exchange-traded stocks.
Apple has a large and ardent customer base or what Warren Buffett would call a moat. Many people—when they need computers or iPhones—go straight to the nearest Apple store.
On a value basis, Apple is trading at a price:earnings ratio of 12 which is ridiculously low for a growth stock., especially when the price:earnings ratio for the market averages is about 18. It has a huge hoard of cash which can be used for acquisitions and research and development.
As for people who put their money where their mouth is, investment manager Carl Icahn has a huge amount of Apple shares and keeps buying more. His expertise will be a great benefit to the company.
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