Should You Buy Apple Stock?

A blog about business and economics.
Feb. 17 2012 1:25 PM

Should You Buy Apple Stock?

My colleague Farhad Manjoo says you should, and since I bought some AAPL shares recently I obviously agree with him. I think this chart from Horace Dedieu nicely summarizes the view that there's plenty of growth potential here. The iPhone is their number one product, but the iPad is actually an even more successful product out of the gate:

1329503099628

But I do think it's worth emphasizing that to go from optimism about Apple's profit trajectory to optimism about Apple's share price does require some extra steps. My view is that in this era of depressed bond yields, if Apple started paying a dividend its share value would leap upwards as it would be really sweetly positioned on the risk/reward curve. But as long as they don't do that, people are going to keep discounting the value of a revenue stream that may end up being squandered on some ridiculous failure—Apple's yet-to-be-devised version of Microsoft's Bing sinkhole. Note that for all that Microsoft has become an unfashionable company, it's hardly an unsuccessful one. Its core operating units as of 1999—selling Windows and selling Office—are still huge cash cows.

Advertisement

Which is all just to say that hard as it is to forecast events in the real economy, it's that much harder to forecast events in the financial markets. There's a cloud of pessimism hanging over Apple's share price right now, and while I have a pet theory as to what's causing it nobody really knows and it's not obvious that another year of blockbuster sales would dispell it.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Frame Game

Hard Knocks

I was hit by a teacher in an East Texas public school. It taught me nothing.

Chief Justice John Roberts Says $1,000 Can’t Buy Influence in Congress. Looks Like He’s Wrong.

After This Merger, One Company Could Control One-Third of the Planet's Beer Sales

Hidden Messages in Corporate Logos

If You’re Outraged by the NFL, Follow This Satirical Blowhard on Twitter

Sports Nut

Giving Up on Goodell

How the NFL lost the trust of its most loyal reporters.

How Can We Investigate Potential Dangers of Fracking Without Being Alarmist?

My Year as an Abortion Doula       

  News & Politics
Weigel
Sept. 15 2014 8:56 PM The Benghazi Whistleblower Who Might Have Revealed a Massive Scandal on his Poetry Blog
  Business
Moneybox
Sept. 15 2014 7:27 PM Could IUDs Be the Next Great Weapon in the Battle Against Poverty?
  Life
Outward
Sept. 15 2014 4:38 PM What Is Straight Ice Cream?
  Double X
The XX Factor
Sept. 15 2014 3:31 PM My Year As an Abortion Doula
  Slate Plus
Tv Club
Sept. 15 2014 11:38 AM The Slate Doctor Who Podcast: Episode 4  A spoiler-filled discussion of "Listen."
  Arts
Brow Beat
Sept. 15 2014 8:58 PM Lorde Does an Excellent Cover of Kanye West’s “Flashing Lights”
  Technology
Future Tense
Sept. 15 2014 4:49 PM Cheetah Robot Is Now Wireless and Gallivanting on MIT’s Campus
  Health & Science
Bad Astronomy
Sept. 15 2014 11:00 AM The Comet and the Cosmic Beehive
  Sports
Sports Nut
Sept. 15 2014 9:05 PM Giving Up on Goodell How the NFL lost the trust of its most loyal reporters.