Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

How to Catch a Falling Apple Inc. (AAPL)

LONDON — “Never catch a falling knife” is an oft-quoted investing saying: a share that falls can continue falling further and faster than you ever imagined, so watch your fingers! Okay, that’s understood, but should you ever catch a falling Apple Inc. (NASDAQ:AAPL) ?

At the beginning of the year, just before the announcement of its latest results, I tipped Apple Inc. (NASDAQ:AAPL) as one of my best buys of the year. I felt it was a good contrarian buy — once the go-go stock of the moment, the mounting negative publicity around the company had caused a major sell-off.
Apple Inc. (NASDAQ:AAPL)

A little perspective
A few days later, the company’s latest results came out, causing the share price to slump 10%. The share price fall was so rapid it left me rather stunned and wondering: was I wrong about Apple Inc. (NASDAQ:AAPL) all along?

Well, let’s put this into some kind of perspective. Although Apple Inc. (NASDAQ:AAPL)‘s results were mildly disappointing, it was still a good quarter for the tech giant. The company is selling more iPhones and iPads than ever before. And I suspect sales, particularly of tablet computers, will go from strength to strength over the next few years.

The investment case still rings true
Already, one in six computers sold today is an iPad. Yet big business is yet to really adopt the iPad. Once companies start buying tablet computers instead of laptops and desktops, you can expect Apple profits to be given another boost. And, of course, there is the emerging market story. And Apple TV…

The crux of my investment case: that we are still at the early stages of a long-term trend away from PCs and laptops to smartphones and tablets, still rings true.

But one thing I did underestimate was the surge in sales of Apple Inc. (NASDAQ:AAPL)‘s arch rival: Samsung Electronics Co., Ltd. (KRX:005935). While Apple has gone for margin and quality, Samsung has gone for volume. The result is that Samsung sells more smartphones than any other company on the planet, but — crucially — Apple still makes more profit.

Samsung’s success is putting pressure on Apple’s margins, and it is also trying to out-innovate the boys from Cupertino. How can Apple possibly compete? In my view, there is no easy answer. It just has to keep trying, and keep innovating.

But Apple is more than just a technology company. Out of a unique blend of creativity, design, and simplicity, Steve Jobs has fashioned a global brand that is, still, second to none. For this reason, in my mind, Apple remains a buy.

Apple has been an astonishing growth story over the past decade. It is a prime example of how a rapidly growing company can be rocket fuel for your portfolio.

The article How to Catch a Falling Apple originally appeared on and is written by Prabhat Sakya.

Both Prabhat and The Motley Fool own shares in Apple. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!