Why Apple’s stock price could keep on climbing

“Apple may have more growth ahead of it than Wall Street fears, and that prospect could give the shares another nice lift,” Andrew Bary writes for Barron’s.

“Sanford C. Bernstein analyst Toni Sacconaghi lifted his price target to $615 from $575, citing an aggressive share-repurchase program that should help earnings and provide ‘a potential backstop to a pullback in the shares,'” Bary writes. “Indeed, the financial story at Apple is underappreciated. After years of sitting on a growing mountain of cash, Apple has become an aggressive buyer of its stock while also initiating, and then raising, its dividend, which now provides a yield of 2.3%. Under CEO Tim Cook, the company bought back $18 billion of stock in the March quarter and has shrunk its share count by 7% over the past year, to 880 million shares.”

“With an expansion in its buyback program to $90 billion from $60 billion, Apple probably will buy back at least $44 billion of stock before the end of calendar 2015, or about $6 billion per quarter,” Bary writes. “The repurchases could boost earnings per share by about 6% in the current fiscal year ending in September and 5% in the following year, Sacconaghi estimates.”

Read more in the full article here.

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  1. So what happened to the article yesterday about Apple making a competitor to YouTube that was going to be called FaceTube? Was that just an April Fools joke that was posted a little late?

    1. That was a mistake by someone who didn’t realize that the patent:

      1) Didn’t cover or describe anything on the server side.

      2) Used fictitious names for actual services. CNN iReport became Cable News oReport, Vimeo became Vizeo, and YouTube/Facebook were combined into the fictitious name FaceTube.

      3) All of these services are already a part of iMovie and so is the share functionality as described by the patent and shown in the images.

      I’m glad MDN pulled it to avoid feeding the baseless rumor mongering.

  2. The timing of the 7-for-1 stock split is no coincidence. Apple must have a string of major product announcements lined up, starting in June (continuing into the Fall and beyond).

    This article seems to point to more mundane (already known) benefits such as increased stock buyback and dividend increase as the fuel for a climb in AAPL. Yes, those actions provide a good foundation. But Apple has been doing those things already. Why do a stock split now?

    Obviously, Apple has MAJOR product-related news immediately before or after the stock split effective date. The lower per-share price makes AAPL “more accessible” to investors who psychologically (not logically) perceive buying 100 shares at $80 is a better deal than buying 14 shares at $560. And, it’s likely to be a string of product releases, not just one product. For example…

    Significantly enhanced new iPhone
    Significantly enhanced new iPad
    “Something related to TV”

        1. It would benefit them in two ways:

          1. It would attract more mainstream investors.
          2. The values for the company are weighted very differently. The Dow uses a historical system that averages 4,000+ stocks, NASDAQ uses a weighted system that looks at 30 stocks.

      1. And options contracts are for control of 100 shares of stock. The high stock price means that control of 100 shares through one contract has a very high price today compared to when the stock was at $90 per share. Back then the price of an equivalent contract (strike price and expiration time), was $1, compared to $20 today. This makes options investing very risky, since large sums have to be committed to a vehicle that may become utterly worthless upon expiration.

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