“Simple question to the Apple (AAPL) bulls whose answer has enormous implications: when do you plan to sell?” Ashraf Eassa writes for Seeking Alpha. “I don’t know about you, but when I buy a stock, I typically have a ‘target price’ in mind at which I would decide to either sell calls or outright sell the stock. Why is this? There’s nothing more irritating than seeing a major unrealized profit evaporate into thin air… well, except a giant unrealized loss! In this article, I implore investors in Apple – even at these levels – to answer the simple question: at what level would you sell?”
“How much upside do you see versus downside? Clearly, $705 was a top that was rejected pretty violently, and even the $600’s couldn’t hold for that long. What do you think it will take for the broader market sentiment to all-of-a-sudden shift in order to bring the price per share up?” Eassa writes. “The ‘saving grace’ here is the cash. While many factor it into their valuations as Apple looks even cheaper from an EV/EBITDA standpoint, I believe that Apple can truly ‘save’ its shareholders by getting super aggressive with its buyback. Enough of this $10B authorized nonsense – Apple, you have $137B on your books collecting a mere 2% or so!”
Eassa writes, “If Apple were to engage in an aggressive buyback, it could help shareholders in more ways than juicing up the EPS line (although this really would help). See, when a company buys back stock, it does so on the open market. Now, you’ve got these hedge funds that are maybe playing with a $1B AUM… or if you’re David Einhorn, $5B. But Apple has $137B. That means it could literally go and buy back 34% of its shares at the most recent closing price! So, what’s stopping Apple from hiring, say, UBS and telling them to switch on the buyback program whenever the stock chart starts to get bearish? Not only would this help to get the traders pushing this stock in the right direction for shareholders, but it would also have the added effect of juicing EPS.”
Read more in the full article here.