Investor Bert Dohmen said on CNBC Monday that you'd have to be "deaf, dumb and blind" to buy Apple stock.
With all due respect, I think that's ridiculous. I think at face value that ignores the basic fundamental strength that Apple has as a company.
There's no doubt that iPhone sales are slowing down as saturation occurs in the overall market but that's to be expected. As Tim Cook recently said in an interview, isn't it a wonderful problem to have when you've sold 1 billion devices all with possible upgrade opportunities and more people using your device than ever before? The upgrade opportunity is incredible.
When coupled with the opportunities for Apple Pay in other services businesses (which Tim Cook has said is "growing at a tremendous rate"), I don't think you need to be blind, deaf, and dumb to buy this company. In fact, I think you simply need to look at the numbers and recognize that, with the cash flow that Apple is generating, combined with its incredible market brand, at worst this is a good company. At best, this is the company currently undervalued by the investment marketplace.
The opportunity is compelling and leads me to believe that Apple is one of the most reasonable opportunities right now. There are five basic reasons why I think this makes sense:
1. Margins. Apple continues to have huge margins for products sold despite the inevitable breakdown in phone pricing as new models come on the market.
2. The service division continues to excel and recent Apple earnings releases suggest this trajectory is likely to accelerate.
3. Artificial intelligence. Apple is not ignoring AI or augmented reality as an opportunity for growth — the company continues to spend significantly on research and development.
4. Autonomous cars. The rumored pivot away from making an actual autonomous car and moving toward becoming the operating system of these vehicles leads me to believe more strongly that this is a growth opportunity for the company.
5. Future upgrades. Many Apple phone users did not upgrade into the Apple 6. This leads me to believe that a super-cycle upgrade possibility exists either with this year's phone or next year's 10th anniversary handset.
I respect others who have contrarian opinions and there's no reason to believe that the conclusions drawn by this analyst are not well-meaning. But I strongly believe that this view ignores the cash flow opportunities for this company and its market position. Just because they are borrowing money as a way to efficiently handle stock buybacks and dividend payments doesn't mean the company's core business is a problem.
Bottom line: I think that Apple in an investor's portfolio makes sense to have as at least a component of core assets especially since this company pays a high dividend and well as continues to exhibit significant growth potential.
Oh, and if you're looking for a second opinion: Warren Buffett just increased his stake in Apple as well.