Buy Like Buffett: Invest in Apple Stock without Steve Jobs?
Apple has been in the news almost daily over the past few years. The news was positive the majority of the time with the company coming out with a great product followed up by an even greater product. For the first time in awhile there was bad news today at Apple Incorporated. CEO Steve Jobs is taking a medical leave of absence from the largest technology company in the United States. CEO Tim Cook will assume charge of day to day operations at the company.
So, should you invest in Apple without Jobs? The Growth of Apple, Inc.
Most of the success of Apple is due largely to Steve Jobs. Jobs built Apple into the behemoth that it is today. He started the company back in 1976 and returned the company back to its position of dominance. Apple was floundering before Jobs returned to the company in 1997. The stock was a dog and the company appeared headed for extinction.
Steve Jobs revitalized the company with his innovative inventions like the iPod, iPhone and iPad. Apple has grown into the second largest company publicly traded company in the world with a market cap of $320 billion dollars. The stock has gone through the roof and trades just below $350 a share. Jobs is not only the driving force at Apple but the leader that inspires confidence from shareholders and Wall Street investors.
Time To Buy Apple, Inc.
The stock has had a meteoric rise and has made a ton of dough for investors over the past few years. Apple won’t grow at the 50% rate of the past few years but the stock can still grow at a 20% clip especially with the new Verizon iPhone deal. That deal alone will add billions to the company’s revenue. Apple still has a fantastic balance sheet with $25.6 billion dollars in cash and absolutely no long term debt.
If the stock drops dramatically, I would be very tempted to start buying Apple soon. In my opinion, the stock is reasonably priced at its current valuation. The stock will probably suffer a pullback over the next few weeks as investors worry about the company’s future. This might be an opportunity for prudent investors to pick up shares on a pullback.
Investors have sold off the stock many times over the past few years, only to watch it rebound mightily. There is no reason why this trend will not continue. Hopefully Steve Jobs will return in perfect health and patient investors will be rewarded.
Mark Riddix is the founder and president of New Horizons Financial Management, an independent investment advisory firm that provides personalized investing and asset management consulting. Mark is a regular contributor to Seeking Alpha and has written financial columns for Baltimore and Washington, D.C. area newspapers. Mark publishes his own financial blog, BuylikeBuffett.com and has written the book Your Financial Playbook.