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Should You Invest in Apple Now?

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    Daniel Ernst, Hudson Square Research principal, on investing in Apple stock amid its recent losses.

  • Duration 4:13
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Cap all -- -- -- tumbled trade below 500 dollars this morning for the first time.

Eleven months as investors worry about slap iPhone 5 demand back up over that level now but.

Is now the time to -- Daniel Ernst of Hudson square research joins us with his take.

Daniel what do you say we have a rare opportunity by animus that -- we've had.

I think 1520%.

Type corrections and apple in the last five years and each one of them -- proved to be Andrea -- buys stock.

I tend not to look quite -- short term if you look at the five year track record.

Revenues are up sixfold.

Earnings are up eleven fold just this last year.

Revenues -- 45% earnings grew 60%.

Yes and he treated fourteen point 75 times the issues are -- 7%.

-- ago fifteen point two -- it ten times.

Earnings are forty -- almost instant discount.

The S&P -- say.

Is apple below average -- they actually a company that's worse than the average company in the S and -- happened they have inferior products and having nuclear balance sheet and fear growth prospects me it's old friends and now the Russians appear.

Company on average isn't yet they treated a significant discount to get attempting to.

And yet.

The stock in September was at 700 dollars and nobody was taken -- -- recommendations off then it fell to the 500 dollar level.

Are we talking a problem more now all the emotions that math because on the price earnings multiple basis of very cheap stock but maybe it's lost -- -- -- buff.

Yeah I think that's definitely true mean for years less with less for five years despite the fact that they were growing very large and they get in the got very big -- actually work.

Accelerating growth.

But now we're at the point really doing you know fifty billion dollars for revenue in the quarter -- five years ago they did 24 billion dollars -- entire year.

Right so they're starting to get that the law of large numbers finally -- catching up apples and I think people -- kind of readjusting.

-- activity to the you know that the growth rate but it it still tremendous growth relative to.

A large cap company -- still innovating more than most countries you can Google over the last five years.

Stocks actually flat -- Apple's up -- 60% rate even over the course of the year after the you know that the movements have a 500 apple was still a top forming large cap stock.

Still I I think that you know it's a lot more volatile than their earnings.

Growth has been the stock.

It's a lot more volatile than their innovations victory has been so I think that it.

Apple investors have to stomach a certain degree of volatility yeah I think at the end of the year you -- had.

Well a lot of people doing you know listened to bill tax just a profit selling because capital gains from going up and don't in most people were invested in apple were up.

-- with the stock -- at 505 dollar range it hits this kind of nice support level because it's apparently.

Got a note on this this morning a 50% retracement from the highest seven watered down to a recent low in 2011 of like three tenors something.

But if it ends up closing below 500 dollars on one of these days does that stocks suddenly psychologically help to fall down like 450 before finds new support.

I mean I'm not typical -- the clear -- -- praise all along -- I look at it as.

Over the next five years our consumers can be using more apple products.

Or less.

Will apple be innovating more or less.

And I think that the opportunity that apple has -- into the market you know we did our first college survey nine years ago.

Apple had something like 12% share which was four times the rate that they had.

In their bitten national average today to have a 60% share of these college kids that we survey every year.

They're tomorrow CIO's and so we're not even in the corporate market place yet for from Mac and so I think there's still up require opportunity whether -- apple comes out with a S mar iPhone -- bigger iPhone -- cheaper iPhone.

You know paid more powerful live -- -- doesn't really matter right to consistently innovating.

Did you unit of very high margin keep high quality products to keep the high quality management team I think it's an opportunity you know -- -- And where -- they go on the new products I wanna guarantee that what happened within a week or two -- -- just bought the most recent one that is now outdated thanks for being with us today Daniel -- question about huts is -- okay.

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