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No surprise apple stocks and -- beat in and is down over 30% since hitting its all time high back in September.
One fund manager isn't backing off the sack Howard ward at -- is chief investment officer for growth equities fund and he manages -- -- -- fun.
Joins us now Howard you are like the lonesome dove out there I mean we.
Starting to -- well some people turning the you -- pros still pretty steadfast on his company.
Yes well you know -- -- -- actually got down to 419.
On March 4 so it's actually it's -- about 9% price since then.
This just the beginning I think of a broader term bigger turn -- the stock the stock is being priced.
As if it is in the same category as a Blackberry and a Nokia and -- Dell and Hewlett-Packard.
And I think that's just completely wrong Apple's not getting any credit for their tremendous earning power.
The cash on the balance sheet.
And they're very large market share in its Smartphones which I think on a global basis will grow over time what you think that if you think because the expectations were just so darn high.
You know this stock became over -- to the upside and then they sort of had a mess in terms of their expectations with the last quarterly earnings.
And so we've had to reset in the stock price and with a stuck having fallen 40% from peak to trough and just a few months.
I think it's fair to say that their business -- -- -- -- anywhere near as much as the stock price -- OK so but what is it is it a 137 dollar cash step they're sitting on that that attraction well you know it's multiple things right now there's a valuation argument you're paying four point eight times enterprise value to die at the multiple operating cash flow.
That's very low like -- -- that's right down their price to parity with the Blackberry with the Nokia with a Hewlett-Packard for example.
It's priced at a discount to Exxon which is a big commodity producer with 3% top -- brought it to the discount to most of the defense contractors like.
General dynamics in north -- to cheap stock.
They're gonna raise the dividend probably within the next month really here news on that.
We've expected dividend to go up probably by on the undamaged a 50%.
Company right now generates 42 billion dollars of free cash flow of which about ten billion.
Is going to fund the dividend by 50% increase five billion dollars still leaves plenty of money free cash -- for the company do.
The -- make acquisitions and share buybacks.
That's the big unknown what are they doing what's the next product is it -- cheap iPhone in China is it apple TV we're just -- and I don't watch out what is it well the iPhone right now generates about 70% plus of the company's profits it's going to be very typical for anything else to.
Come anywhere close to that in order of magnitude so what it's gonna be it's it's gonna be a lower priced version of the -- -- For the emerging markets an area where they have very little penetration at this point.
And that's gonna really drive the next leg of growth I think that happens this year what's the risk I mean there's a lot of things right -- -- windows she got.
Lower subsidies from the carriers what do you worry about the most.
You know I think that as long as apple continues to innovate and they really have been the innovator they haven't gotten credit for that again.
I'm very comfortable with apple ecosystem with the brand loyalty to people have them.
Yeah their market share in Smartphones has been very steady at 19% in the last year.
The market share that that Samsung has gained has been at the expense of the other providers right so I'm feeling pretty good about apple that.
I don't think that apple buyers gonna go flocking to -- Yeah I just my whole house over I'm not turn it over again we are all out -- all in this taciturn.
You I have been a defender to.
Tim Cook quickly got you know tens you know managing this company -- -- it is Steve Jobs has gone.
It's companies that -- 42 billion dollars is your net income.
The number two company in the US -- it was excellent at 35 billion.
-- has 2.4 times the revenues -- apple apple has twice the free cash flow of Exxon it's an extremely undervalued situation and I think Tim Cook is going to be.
A great CEO they should hire you to give a price target on the stock.
If this stock simply sold -- twenty to 30% discount to the S&P based on operating a multiple operating cash flow.
It's -- depressed too up over a hundred dollars per share so six to seven times -- -- does gonna get the stock to 570 to 670 and that's still twenty and 30% discount.
To the S&P which is almost nine times ebitda.
Howard you have an iPhone I do it's like Jeremy yeah I had to ask how hard hard get vaccine and has announced it thank you picked up -- thankful that Samsung and it happened --
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