“While there are hundreds of models to choose from, the smartphone war increasingly is a two-horse race between Apple and Samsung Electronics. Together, these two companies will sell 49% of the planet’s smartphones this year, but account for nearly all the profits, and the Web overflows with noisy opinions about whose is superior,” Kopin Tan reports for Barron’s. “Investors face a more intriguing choice: Which will be the better stock to own over the next year?”
“While Samsung may be the underdog, Apple is the more underappreciated stock. That gives Apple the edge in a bout between these two heavyweights — a winner not by knockout, but by decision,” Tan reports. “Yes, Earth’s No. 1 brand just may be its most misunderstood company.”
Tan reports, “In late October… while revenue grew 27% and profit expanded 24%, Apple beat analysts’ targets by the slimmest margin in years. Management told investors to expect per-share earnings of just $11.75 this quarter, well below $13.87 a year ago. It also cut projected gross margins from 40% to 36%, which money managers took as a sign that Apple is losing its competitive edge. The word on Wall Street was that Apple had slipped from hypergrowth to merely healthy growth, and that it was time to bolt. But what investors fail to grasp is that this margin compression really is part of Apple’s long-term strategy.”
Much more in the full article here.