Apple Inc. (NASDAQ:AAPL) has already rebounded from its lows of $385.10 on April 19, 2013 to its current $450 range. The company’s performance has obviously waned in the last year or so, but there is still reason for optimism for Apple investors. The company added to its previously announced $10 billion share buyback program, pumping an additional $50 billion into the program for a total of $60 billion. The company says it’s the largest stock buyback in corporate history, and Apple Inc. (NASDAQ:AAPL) will issue debt in order to complete it. Why take on debt when it has a cash hoard of $144.7 billion? Primarily because more than $100 billion of that cash is in overseas bank accounts, meaning that it would cost the company far more when brought into the USA as taxes will be imposed upon the amount.
Google Inc (NASDAQ:GOOG) continues to crank up its gears and is picking up speed with its diversified search engine, Android solutions, Play Store and technology products. Google’s core search business has been extremely stable since its birth, with only specialized search engines, such as Tripadvisor.com, taking some of its market share away. This continued influx of cash allows the company to not only retain the crème de la crème of its employees, but also provides them the freedom to explore and come up with new products such as Google Glass. On the back of a strong quarterly performance, Google Inc (NASDAQ:GOOG)’s stock, which was dipping earlier, is now expected to continue its tireless climb towards $900 per share.
Samsung strives to further its tables with the release of its new flagship phone, the Samsung Galaxy S4. Starting at $249.00, Samsung has added such innovative things as a new vibrant 5-inch screen with a full-HD display and an enhanced camera. Moreover, the company has received the approval for selling its new device to the US government and even the Pentagon. Approval by the Pentagon means that the new Galaxy S4 can be used by all networks in the Department of Defense.
Competition
The stock valuation of the three companies suggest that while Apple Inc. (NASDAQ:AAPL) and Samsung, understandably, look underpriced due to their earnings, Google is fairly priced.
| Indicator | Apple | Samsung | |
|---|---|---|---|
| Price/Earnings ttm | 10.74 | 25.94 | 9.7 |
| Price/Book | 2.9 | 3.7 | 1.7 |
| Net Income Growth (3 Yr Avg.) | 71.8 | 18.1 | 35.5 |
| Revenue Growth(3 Yr Avg.) | 53.9 | 28.5 | 10.8 |
| Dividend Yield , % | 2.71% | – | 0.57% |
| Return on Equity | 33.3 | 16.5 | 17.9 |
| Current Price | $449.90 | $871.32 | $ 1300.00 |
Estimated Fair Value Range | $865-$1009 | $870-$1098 | N/A |
| Stock Valuation | Undervalued | Fairly Valued | N/A |
| Upside Potential to Reach Fair Value | 92% | – | N/A |
Data from Morningstar and Financial Visualizations on June 3, 2013
Currently priced above $870, this is a phenomenal performance for Google Inc (NASDAQ:GOOG). Apple’s revenue growth has been consistently remarkable, and Google continues to feed off its search engine business, which has become the backbone of its success. For Samsung, operating income reached $17.458 billion with a 21% operating margin and a 24% market share. The three companies do not have any debt at the moment, though Apple does plan to take on debt soon. Overall, Apple Inc. (NASDAQ:AAPL) has stronger finances and even stronger sales results, which will always help the company find its way back to the top.
Final thoughts
For Google Inc (NASDAQ:GOOG) and Apple, both stocks have “buy” written all over them. Both stocks provide returns and security, too, albeit in different ways: Apple Inc. (NASDAQ:AAPL), with its cash hoarding and lower price, and Google, with its immaculate cash flow source and incessant increases in its stock price.
For Samsung, passing the government’s security test doesn’t automatically guarantee a sale growth. This is because approvals do not directly result in product orders, but facilitate the process by eliminating the need for security reviews at the individual DOD organization level. Samsung and potentially Apple Inc. (NASDAQ:AAPL) still need to fight over juicy government contracts. But assuming Apple does win security approval, the rivals will duke it out on a new playing field.
Marina Avilkina has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google.
The article Google, Apple and Samsung: Which Is the Best Bet for Profits? originally appeared on Fool.com.
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