Apple Isn’t Ripe, So Stop Betting Against It: Analysts
Applehas a lot of investors eating their words today.
“Its one of those stocks that everybody wants to bet against,” said chief investment strategist Brian Belski, of Oppenheimer.
But the company's shares , whose price hit $500 for the first time on Monday, are up more than 20 percent year to date. And this is before Apple launches iTV.
“It deserves an ‘overweight’ [rating],” said Belski, while disclosing that Apple is Oppenheimer’s largest holding in its “large-cap core” portfolio.
An “overweight” is simply a portfolio allocation larger than that of the stock’s benchmark, which in this case is the S&P 500,with about a 3.43 percent in Apple.
Scott Sutherland, analyst at Wedbush Securities, also thinks betting against Apple is the wrong way to go.
“It’s hard to bet against them. Yeah, everyone owns the stock that can own the stock right now — or that’s the argument against it. But if [Apple] starts putting that cash towards a dividend, it will open up to new investors,” Sutherland said in a separate interview on Monday.
Positive first-quarter sales of the iPhone and iPad, and what that means for Apple’s future product launches, has Sutherland raising future estimates.
“But valuation is still not that expensive, and I think longer-term it can still move higher from here,” he said.
There are other reasons Sutherland thinks the tech giant’s mid-teens price-to-earnings multiple of 14.2 is not too expensive, but “fair.”
“They’re still low market share in many of their markets, and that sets the table for lots of growth for the company. If you look at the iPhone alone, its just 5 percent to 6 percent of the overall market,” said Sutherland.
Both Sutherland and Belski are also expecting Apple’s iTV to be another growth driver — even beyond the tech sector.
“Its becoming more of a consumer staples-type stock. If we want something, we're gonna go out and buy an Apple product,” said Belski.
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Apple is Oppenheimer’s largest holding in its “large-cap core” portfolio. Wedbush Securities makes a market in Apple. Neither Brian Belski nor Scott Sutherland personally own the stock.