How Apple Inc. (AAPL) Can Get ‘Close to a Trillion Dollars in Value’: Portfolio Manager

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Apple Inc. (NASDAQ:AAPL) is the top stock pick among the funds we track; that’s no secret. What is up for debate, though, is just how shares of the tech giant will perform in 2013. There are many opinions, and earlier today, we gave the bear’s case, so to speak, from the renowned Doug Kass (see his thoughts here).

Apple Inc. (AAPL)

On the other side of the aisle, there are a number of bullish scenarios that can push Apple Inc. (NASDAQ:AAPL) higher, but it all starts with the valuation. Recently, Gamco Portfolio Manager Larry Haverty was on Bloomberg TV discussing the stock’s relative attractiveness. Here are some of the highlights:

“It trades at 6 times current cash flow [...] that’s a 16% return, and sitting on the sidelines is $121 billion of cash, I think probably at the end of this quarter probably over $130 billion of cash. It’s earning nothing, and if it decides to go from earning nothing to buying the stock at 16%, you increase the shareholder value.”

Regarding Apple Inc. (NASDAQ:AAPL)’s cash flow, we’ve covered this subject quite a bit recently. In case you haven’t read up on just how Apple manages its $121 billion of investable cash, be sure to check out our recent in-depth analysis on the topic (see What is Apple’s Secret Hedge Fund Buying?). Getting back to the point, Apple absolutely has the capacity to boost its dividend, which is projected to yield around 2% based on the current payout.

Here’s a look at how Apple’s stock has performed over the past year:

Keeping this in mind, Haverty had this to say about Apple Inc. (NASDAQ:AAPL):

“I think last year, at the peak, there was probably over $300 billion of unrealized capital gains in Apple, just from the performance in the last year [...] there was some thought, you’re now paying 15%, that might go to 45% [...] that’s kind of unprecedented in terms of the tax change and the tax magnitude, and I think that has created distortions in the stock, which create the opportunity.”

Haverty also discussed Apple Inc. (NASDAQ:AAPL) “in a vacuum” to make his case; continue reading to see his thoughts…

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