4. Don’t underestimate the power of buybacks
It’s been a year since Apple turned heads by committing $45 billion in domestic cash over the next three years to dividends and share repurchases.
Investors have benefited from the quarterly payouts, and the falling stock price provides a bank-busting 2.5% yield now. However, they haven’t really been treated to the buyback benefits.
Aggressive repurchases can not only help support a share price but prop up earnings on a per-share basis. Just check out GameStop Corp. (NYSE:GME) . The video game retailer has been able to mask its store-level weakness through buybacks. GameStop has lowered its comps guidance four times over the past year, but its earnings guidance has remained intact on a per-share basis as a result of ambitious buybacks.
Apple Inc. (NASDAQ:AAPL) doesn’t have anything to mask, yet, but buybacks may be the ticket to reverse the unwelcome trend where Apple has come up short on the bottom line in three of the past five quarters.
5. But there’s one more thing
CEO Tim Cook naturally lacks the showmanship chops of Steve Jobs. There’s a void missing in Apple Inc. (NASDAQ:AAPL) presentations when Jobs would stop — freezing the crowd with “but there’s one more thing” — and raise the bar on innovation.
However, we all know that Apple is working on new stuff. There are too many reports surfacing on Apple wristwatches, streaming music services, and full-blown HDTVs. Oh, and that’s the stuff that’s being leaked.
Who knows if Apple isn’t going to beat Google Inc (NASDAQ:GOOG)to wearable iSpecs, revolutionize the cable industry with a la carte programming, or put out a product that may not seem necessary at first (think iPad) but proves indispensible in short order?
If you believe that innovation at Apple perished alongside Jobs, then you have every reason to dump Apple at this week’s lows. Just don’t be surprised when the next iGadget excites the market, rallies the stock, and brings on seller’s remorse.
The article 5 Reasons Why Apple Just Bottomed Out originally appeared on Fool.com and is written by Rick Aristotle, Munarriz.
Longtime Fool contributor Rick Aristotle Munarriz has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, GameStop, Google, and Microsoft.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.