Apple Inc. (NASDAQ:AAPL) shares could be primed for more gains even given the stock’s vintage 21.96% year-to-date rally. According to Jeffrey Kvaal of Nomura, Apple Inc. (NASDAQ:AAPL) could rally by another 20% to around $165 per share due to the analyst’s expectation that sales of the iPhone 8 (which will launch later this year) will blow past the current Wall Street consensus and unlock even more EPS growth for the tech giant. Basically the iPhone super-cycle could be even more ‘super’.
In addition, Barron’s writer Johanna Bennett notes that many Wall Street analysts expect Apple to up its already generous capital returns. Specifically, Amit Daryanani of RBC Capital Markets thinks Apple will add $35 billion to its buyback program and up its dividend by 15%. Throw in the expectation that President Trump will allow for American companies to repatriate their overseas profits at potentially very reasonable rates, and it’s not hard to see why Apple shares have rallied so much and could rally further. Apple currently has almost a quarter of a trillion dollars in cash overseas. Due to its domestic debt, the company has net cash of $159 billion overall. Read on to see what the smart money thinks of Apple Inc. (NASDAQ:AAPL).
What Does The Smart Money Sentiment Say?
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by the S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points over the last 4.5 years (see details here).
According to our data, the smart money as a whole was slightly less bullish sequentially on the name. Of the 742 elite funds that we track, 113 had a bullish position in Apple Inc. (NASDAQ:AAPL) at the end of the fourth quarter, down 32 funds from the previous quarter.
That being said, Warren Buffett‘s Berkshire Hathaway has bought a lot of shares of Apple Inc. (NASDAQ:AAPL) in recent quarters, and given Buffett’s track record, many investors tend to side with Buffett over the hedge fund crowd in this case. Berkshire had 57 million of Apple shares at the end of Q4, and added 120 million from January 1 to February 27. That makes Apple one of Berkshire’s largest positions.
The Bottom Line
While Apple now isn’t as cheap as it was before (it trades for a forward P/E of over 15), the tech giant has the Buffett thumbs up, pays a nice dividend yield, and has a very profitable services segment that could potentially do as much as $50 billion in sales by the end of the decade. Given those traits, the stock looks like a good long term holding.