“You can have too much of a good thing. That could be one thing holding back shares of Apple (AAPL),” Tiernan Ray writes for Barron’s.
“The stock has performed fantastically this year, rising 18% compared with a roughly 4% decline in the Nasdaq Composite Index,” Ray writes. “But many, including yours truly, believe Apple is due much more. At a recent price of $381.02, the stock trades at just 11 times this year’s projected $34.76 per share in profit. Factoring in Apple’s approximately $87 a share in cash, the multiple’s even cheaper. It’s an insanely cheap stock for a company that might increase profit per share by 26% this year.”
Ray writes, “Apple is the most broadly owned holding in U.S. large-cap growth funds among the top 10 stocks in the Russell 1000 Growth Index, according to a report last week by Sanford Bernstein research analyst Toni Sacconaghi. What that means is that growth funds have gorged themselves on Apple’s success to a degree that their own fund rules no longer permit them to buy the shares.”
Ray writes, Apple has both exhausted its shareholder base among its natural fans, the growth guys, and also failed to charm the other folks in the room, the value guys. And the value guys actually make up vastly more of the world’s assets under management… Apple is getting so big, it is challenged to find new investors. And as that cash pile grows and grows, the challenge becomes greater to lure the hold-outs, the value guys. ”
Much more in the full article here.
[Thanks to MacDailyNews Reader “Dan K.” for the heads up.]