Apple Inc. (AAPL) is still exhibiting the characteristics of a true growth company and is expected to se a reacceleration in its growth rate in fiscal 2014 after significant investment in innovation and the release of new products, says David A. Rolfe, Chief Investment Officer at Wedgewood Partners.
“We still think Apple is a true growth company. It has no doubt been a very difficult year for shareholders. On the other hand, it has been a year of significant investment in innovation, and we see that on display now with their underappreciated iOS 7 software as well as their new iPhones. The current meme is that Apple can’t innovate anymore. We think that’s been laid to rest now with these new products,” Rolfe said.
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Despite Apple‘s challenging year in 2013, when growth rates came to a halt, Rolfe expects a reacceleration in 2014 due to Apple‘s continued innovation and new product releases.
“The company was blooming in terms of their growth rates, and that growth rate hit a brick wall in fiscal 2013. It went from 50% to 70% to zero. On the way up, the stock actually was underperforming its prodigious growth rates. The corollary, unfortunately, is that while we had this year of zero growth, we believe the shares have significantly underperformed what has happened at the company level. Given how sharp the valuation has compressed, the market implied growth of revenues is essentially negative. We expect a reaccelerating in the company’s growth rate in fiscal 2014 on the heels of new products, plus accretive share buybacks,” Rolfe said.
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