We continue to include Apple in both newsletter portfolios. Very few companies have the balance-sheet strength and free-cash-flow generation that Apple does.
By Brian Nelson, CFA
Sell-side analysts are getting nervous about Apple (AAPL), but we’re reiterating our long-term positive opinion on the iPhone maker. We expect a lot of “noise” through the course of 2018 as chatter regarding iPhone unit expectations intensifies and concerns about a US trade war with China ebb and flow. We expect traders to be product-cycle-focused, which may only magnify the inherent volatility of the equity, but we maintain our emphasis on core fundamental analysis, namely the health and sustainability of Apple’s future free cash flow generation, the composition of its balance sheet, and the pace of growth in its dividend. We expect Apple to continue to be shareholder friendly, and corporate tax reform in the US may only increase expected cash returns to shareholders in coming years. Our fair value estimate of Apple stands north of $200 per share, and it would take considerable mis-management to derail the fundamental story at the iPhone giant, in our view.
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Brian Nelson does not own shares in any of the securities mentioned above. Some of the companies written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.