Apple Inc (NASDAQ:AAPL) has had a very established history of enormous growth year after year and has developed a wide-ranging following and loyalty to the brand and to its products. But one analyst made a point that Apple Inc is now conducting stock buybacks, raising dividends and posting a recent stretch of slow, steady growth – all characteristics of something other than a growth company. Could Apple be making the transition into being a blue-chip company, like The Coca-Cola Company (NYSE:KO)?
That was the question being debated during the “Halftime Show” program on CNBC Wednesday, and commentators hada round table discussion about Apple Inc (NASDAQ:AAPL) as a company, and how the stock may perform in the future. One person did not agree with the assessment – at least not yet, saying that he saw the company’s “hypergrowth” continuing at least in the short term, adding that a relatively low multiple (10.8 price-to-earnings) still makes the world’s most valuable company still at a value, especially when compared to blue-chipper The Coca-Cola Company (KO), which is currently boasting a P/E ratio of 18.
You can watch the clip here.
Another commenter on the show wondered about the timing of the analyst note, saying that making such a comparison to a blue-chip like The Coca-Cola Company (NYSE:KO) would have been more viable when the stock was priced at more than $700 per share. He added that “hypergrowth” isn’t really seen at the current $550 level, but he saw a good “earnings story.” The argument focused around whether the market was still here to support growth in excess of 25 percent, or would the growth slow to the 10- to 20-percent level. But one person on the panel noted that the slow-growth charge was mentioned for Apple Inc (NASDAQ:AAPL) before, after the iPod came out, then again after the iPad, and again after the iPhone – yet the company continued to grow. The questions that were not addressed here, though, were these: Does the deeper and broader competition Apple faces now compared to five and six years ago have the dampening effect on the company’s growth? After all, Coca-Cola has a lot of competition in its markets as well, much of which it didn’t have in the earlier days of its market presence. How about the supply-chain issues that have been prevalent lately? What about the lack of innovation and the continuing intellectual-property litigation around the world – would any of these play a role in the growth of the company?
Are the growth days of Apple Inc (NASDAQ:AAPL)? over, Do you think Apple is now a blue-chip stock, and would you see the stock and company differently as such? Is this analysis going to have some legitimacy going forward, and how will it affect investors like billionaire David Tepper of Appaloosa Management LP and their positions?