Apple has fallen like a rock since hitting it's all time high of $705 back in September. Over the past 2 days, it has dropped an additional 12% on concerns of slowing earnings growth. I decided to take advantage and initiate a somewhat speculative (for me) position.
Purchased 11 shares at $438.50 for an initial yield of 2.42%.
I believe Apple shares have disconnected from the fundamentals and see a lot of opportunity from a dividend growth perspective.
-PE of 10.
-$137 billion of cash and investments.
-CEO indicated that Apple would return $45 billion to shareholders over the next three years.
Apple is outside of the companies I typically own, but I do think that the shares have been beaten down a bit too much and represents good value at these levels. Growth is slowing but they still makes good products that people want to buy, is one of the premier companies in the world, and makes a $hitload of cash. If it drops more, I would consider averaging down but would not let it exceed 5% of my portfolio.
This purchase adds $116.60 to my annual dividend income.
The bad things are:
ReplyDelete1) it is possible to maintain a growth rate of 20-30% per year and maintain a very high profit margin?
2) what Apple will do with the cash? the worst scenario would be big take-over...
The good one:
1) P/E its low - 6.8
2) Apple makes good products
In general i think price will go up :)
I do not know. I would be scared of this type of investment. AAPL is not for me.
ReplyDeleteLuke,
ReplyDeleteThanks for stopping by. I think of Apple transitioning from a pure growth play to a dividend value play and I think we are on the ground floor.
best wishes,
AA
Martin,
ReplyDeleteI can see how one would not be comfortable holding Apple. I believe the rewards are greater then the risks and if I am wrong, it is a very small part of my portfolio.
cheers!
AA