Apple (AAPL) stock prices have jumped up and down from the double digits all the way to $700 and then down in the last few years, leading some investors to doubt the value of this technology innovator. But Gordon Reid, President and CEO of Goodreid Investment Counsel Corp., says the current stock price is a better value proposition than seven years ago, when he first bought equity.
“We first bought Apple at $65 a share in 2006. They had $2.25 a share of earnings, and today they are trading at $430, but they have $45 a share of earnings. So by our thinking, Apple today at $430 is much better value than it was at $65. The price is much higher, but the earnings have grown at a much faster rate than the price, and that is the value proposition,” Reid said.
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Apple has a track record of creating new technology, and although some investors say the passing of Steve Jobs meant the end of innovation for this company, Reid says such talk is premature. He adds that, should any fears materialize, a good portfolio-diversification strategy should quell some of inherent risks of investing in equities.
“As we always say to clients when we have a bad day in the market, if Apple or any company comes up with a bad report and falls, it’s just a bad day. It never gets back to their investment policy statement, their asset allocation, their financial plan that determines when they’re going to retire and what their long-term plans are,” Reid said.
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