Apple Inc. Investors: Wait for Things to Settle Down Before Adding to Your Position
Of all the technology companies out there, I have for the past two years believed that Apple Inc. (NASDAQ: AAPL) remains the best of the bunch, for a number of reasons. Despite a valuation which has broken past the $900-billion U.S. mark, Apple remains cheap when compared to its peers in a sector which has seen valuations explode (except for companies with cash generating machines and wide moats related to customer loyalty).
While emerging technologies remain exciting, and investors always want an exciting story to grab on to, recent headlines about Apple purposely slowing down the performance of older iPhones has made many consumers upset. As it so happens, the feelings of many can sometimes seep into the, what should otherwise be, rational discounted cash flow analysis relating to a company. Apple's shares have dipped meaningfully from their 52-week high, and although I continue to pound my drum that Apple is an attractive investment at these levels, I believe further weakness could be on the horizon as investors weigh how consumers will respond to new iPhone offerings if given the option of buying a new battery for their older phone at a discount.
The PR control put in place by Apple relating to this scandal is understandable, and was, in my opinion, necessary. That said, I am one of many who have dipped into my disposable savings fund to buy a new iPhone, and I anticipate the allure of having the newest phone will continue to be the key driver of top and bottom line growth moving forward.
I would just wait until much of this discussion simmers down before adding to a position.
Invest wisely, my friends.