AAPL

Apple’s iPhone 6: The Catalyst to Send Shares to Intrinsic Value

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We recently published an article on the irrational exuberance exhibited within small capitalization stocks. We think as the hype inevitably comes out of the small capitalization space in coming periods, this “speculative” capital, assuming some of it can cross cap restrictions, will flow into underpriced (yet growth-y) equities with extremely strong fundamentals, companies like portfolio holdings Apple (AAPL) and eBay (EBAY) that have tremendous upside potential. Carl Icahn is working diligently to reveal the significant underpricing of eBay in requesting a spin-off of PayPal to unlock value much like that of Yahoo (YHOO) unlocking value via its initial public offering of Alibaba. Yahoo’s shares have performed wonderfully in the wake of the Alibaba IPO. We think Icahn will inevitably get … Read more

What If You Joined Valuentum on January 1, 2013 and Followed Our Transaction Alert Emails…

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Let’s get this out of the way first: we’re not perfect. Though investors can look at our track record over a longer horizon to great satisfaction, as the Best Ideas portfolio (click here) and Dividend Growth portfolio (click here) are doing quite well for long-time members, what about new members that may have joined recently? How would they have fared by following our transaction alert emails? Would they have made money on our ideas? Before we answer these questions, let’s walk through a few ways members use our services. Many like to replicate the actively-managed portfolios that are housed in the monthly newsletters in their personal accounts in their entirety. Others like to use our transaction alert emails for incremental … Read more

5 Steps to Understand Why Apple Is Cheap; Shares Continue to Be Unfairly Weighed Down By ‘Palm Pilot’, Moto Razr” and “Blackberry’ Memories”

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Executive Summary: For Apple to be fairly valued at its after-hours price, normalized earnings per share would have to be assumed to be about $20 per annum, half of Apple’s current annual earnings of $40+ per share. We think normalized earnings at the iPad maker are much higher than what the market is giving it credit for, especially considering the promising ideas in its product pipeline. We’ve raised our fair value estimate of Apple to $680 per share thanks to the time value associated with rolling our model one year forward, offset in part by a slightly lower growth trajectory following fiscal 2014 first quarter results (ending December 28, 2013). We continue to like shares, which are currently trading at just … Read more

Icahn’s In-depth Letter to Apple Still Does Not Remove Time Horizon

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We believe Apple’s (AAPL) shares have valuation upside (see 16 page report), but as we have outlined before here, activist investor Carl Icahn’s proposal to force Apple to buy back stock over a certain time period (“during fiscal 2014”) as opposed to under a certain price (our fair value estimate) is imprudent. We encourage Icahn to further revise his proposal. Additionally, we think Icahn’s valuation process is too simplistic (see footnote 1), and we encourage him to disclose a more rigorous valuation assessment of the firm that takes long-term forecasts into consideration. Said differently, we’d like him to justify why Apple should trade for 16 times earnings on the basis of Apple’s own financials, not merely use the consensus market multiple for justification. … Read more

Icahn’s In-depth Letter to Apple Must Remove the Time Horizon Associated with the Buyback Proposal in Order to Receive Valuentum’s Approval

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Carl Icahn announced Wednesday on Twitter (TWTR), his favorite news distribution mechanism, that he has “purchased $500 million more Apple (AAPL) shares in the last two weeks” and that his investment in the iPad-maker is now worth more than $3 billion. Though the total value of his holdings is still less than 1% of Apple’s $496 billion market capitalization (as of the end of trading Wednesday), the news is making quite the splash.   Having purchased $500 million more $AAPL shares in the last two weeks, our investment has crossed the $3 billion mark yesterday.— Carl Icahn (@Carl_C_Icahn) January 22, 2014 In early December, Carl Icahn released Proposal No. 10, which is a non-binding advisory resolution that the firm complete … Read more

The Best Ideas for 2014 and Beyond: Part II

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A portion of this article is excerpted from the January 2014 edition of the Dividend Growth Newsletter. Valuentum has two actively-managed portfolios: a Best Ideas portfolio and a Dividend Growth portfolio. Each portfolio has different goals and strategies. The Best Ideas portfolio seeks to find firms that have good value and good momentum characteristics and typically holds them from a Valuentum Buying Index rating of a 9 or 10 to a rating of a 1 or 2. The goal of the portfolio is to generate a positive return each year and to exceed the performance of a broad market benchmark. The Dividend Growth portfolio seeks to find underpriced dividend growth gems that generate phenomenal levels of cash flow and have … Read more

Dividend Growth Investors Face Unique Risks in 2014

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With 2013 now in the rear-view mirror, we can happily say that the Dividend Growth portfolio significantly exceeded its goals of an annualized return in the mid- to- high-single digits for the year. We know that you’ve been a part of this journey in 2013, and we wanted to congratulate you as well. In fact, the successful year would not have been so without you, and we wanted to extend a big thank you for that. If you haven’t been a member for that long yet, we’re expecting an exciting 2014, too! For one, dividend growth investors are enjoying a time like no other in the history of the equity markets. The attractiveness of dividend growth investing as a style … Read more

Apple and Facebook Lead the Charge on Monday

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On Monday, official news of an Apple (AAPL)-China Mobile (CHL) iPhone deal sent shares of Apple soaring. We had highlighted initial reports of the announcement December 5, and we fully expect the new business to be a strong fundamental catalyst for the iPhone maker. China Mobile is the largest mobile operator in China by users, and even a low-single-digit conversion rate to the iPhone will move the deal at Best Ideas portfolio holding Apple. The iPhone 5s and iPhone 5c will be available in China Mobile and Apple stores across mainland China beginning January 17, 2014. We think consensus estimates for Apple’s earnings through the middle part of this decade are too low (on the basis of this transaction), and … Read more

Three Reasons Why Dividend Growth Investors Are Quite Savvy

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A version of this article appeared on our website on October 1, 2013. There are many different approaches to investing, but we think dividend growth investors are quite savvy, especially when they combine a rigorous dividend growth process in the form of the Valuentum Dividend Cushion ratio with the valuation rigors behind the Valuentum Buying Index. Let’s examine the three reasons why we think dividend growth investors are a smart group in the age of ultra-low interest rates. #1. Fool Me Once, Shame on You…Fool Me Twice, Shame on Me Today’s dividend growth crowd has seen enough. First, they witnessed the dot-com bubble (1997-2000), a period in stock market history where firms’ stock prices soared in some cases as a result … Read more