Analyst: Buy Apple for its earnings-boosting stock buyback plan

Brian Sozzi for Yahoo Finance:

Sorry GE, but Apple is the new widows and orphans stock.

Investors shouldn’t buy Apple’s stock because a 5G iPhone may arrive in 2021 or the new Apple TV+ will suck in a massive number of subscribers when it debuts this fall. Nope, buy Apple because it wants to give away all its cash to shareholders mostly through an earnings-boosting stock buyback plan, says one veteran tech analyst.

“We think that is part of the bull case on Apple,” CFRA analyst Angelo Zino said on Yahoo Finance’s The First Trade when asked if the tech giant’s financial engineering on buybacks is a good thing for investors. “What we love about the Apple story is that you have a great management team there and two, they are an absolute free cash flow machine.”

Vino added, “Yes, they are aggressively buying back shares — but if you think about it, all that cash they have generated over the last decade that has been sitting on the books is cash that belongs to the investor.”

[In fiscal Q319], The company returned over $21 billion to shareholders through a combination of buybacks ($17 billion) and dividends ($3.6 billion). For the nine months ended June 29, Apple has repurchased a colossal $49.5 billion of its stock.

MacDailyNews Take: It’s going to take a lot of buybacks and, to a lesser extent, dividends for Apple to get to their goal of being net cash neutral – and that’s great news for AAPL shareholders!


  1. The hedge funds are basically ruining it for the small investor. They’re controlling the analysts to only push high-growth stocks in order to make quick money. Those analysts will tell investors to avoid Apple because of its low growth. Not every investor has to make fast money. Steady money is also good. The thing is, Apple has the cash resources to turn itself into a high-growth stock if it really wanted to through acquisitions. Of course, we all know that’s not how Apple operates. Cash amount-wise, Apple buying Intel’s modem business for a measly $1B is hardly enough to get anyone excited. That’s hardly going to quickly boost revenue or profits, so big investors will only yawn at that acquisition.

    Big investors certainly seem to be yawning at Apple’s buybacks. For big investors, there’s nothing equal to high-growth, so without that, I don’t expect Apple’s share price to go up very much. It simply amazes me how Microsoft easily blew past Apple in market cap thanks to a high-growth cloud computing business. Apple sure threw away a great opportunity by mostly ignoring the cloud.

    Apple still seems to be doing satisfactorily without increased iPhone sales, but that’s just not enough for big investors to be happy with. I like Apple’s dividends and will likely see increases over the next few years. How many companies are going to pass Apple in value is an unknown, so I can’t be concerned about that. I’m curious as to whether Apple’s P/E will ever stay past 18 as most of the other major tech stocks. Hopefully, Services can boost the P/E a bit higher, but only time will tell.

  2. I noticed earlier today how Apple’s share price is on a post-earnings roller-coaster dip. The earnings euphoria didn’t last very long with analysts still crying about poor iPhone sales. Apple Services have a long way to go for big investors to stop constantly worrying about iPhone sales. I suspect all those earlier earnings gains to be given back by Friday. That’s rather unsettling for Apple not to hold those gains for even a few days. Oh, well. I guess it’s not for me to understand the stock market. I can only go along for the bumpy ride.

    1. Investors and Apple users know that Apple services are useless without Apple hardware. Services will shrivel dramatically if Apple can’t keep the new hardware sales going. But the nasty secret about Apple services is that they are relatively expensive and restrictive, and not well supported. There simply aren’t any compelling reasons for an Apple hardware buyer to lock himself into Apple’s closed narrow subscription solutions. Apple itself can’t even run its own business without relying on Windows and competing cloud purveyors. What does that say about Apple’s ability to offer the end user a superior value?

  3. Blah blah blah. The MicroShaft successes are because Bill Gates copied the original Mac interface (due to production delays at Apple he was able to just squeak by his agreement with Steve Jobs to hold off for 12 months when shown the coming Mac functionality) and rushed Windows to market a.s.a.p. to establish a huge installed base that should have belonged to Apple. Steve was too trusting of other tech titans (Eric Schmidt, Bill, etc.) who, except for Larry Ellison, all shafted him despite claiming loyalty. Now you know why MS is able to soar despite numerous shortcomings and past failures—they have been the entrenched OS for 35 years and their user base remains gigantic.

  4. “One more thing!”
    Many stock shorters were poised to reap big buck when the earnings report was issued because they believed AAPL would have lousy results. They had to scramble to mitigate their losses when the positive results came out so they hurriedly purchased stock to cover their asse(t)s. Once that activity calmed down, Apple stock prices resumed normalcy with a moderate gain. Go look again, you’ll see.

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