Is Apple Inc. (AAPL) Still a Punch Card Stock?

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Apple’s 2010 entry into the e-book market demonstrates its strength. Here, Apple has used the tablet segment leading iPad to quickly become a major player in the fast growing $4 billion per year e-book space. Long-established book seller, Barnes & Noble, Inc. (NYSE:BKS), whose Nook claims 2% of the tablet market, already pales in comparison to Apple iPad and Amazon.com, Inc. (NASDAQ:AMZN)’s Kindle. Apple’s ascent has already contributed to Barnes & Noble, Inc. (NYSE:BKS)’s decision to exit or modify its e-book business due to the massive losses it has incurred on its Nook sales.

Zack’s consensus earnings growth estimate for Apple over the next five years is 14%, with 2014 shaping up around 10%. With over a billion new consumers in play and likely pent-up American demand, I believe Apple should meet expectations and could easily exceed going forward.

Valuation matters…

Apple has a trailing P/E ratio of about 11 and a forward looking ratio of about 10. Compared to the S&P 500’s 19 P/E , Apple compares favorably to much of the market.

Apple is also the rare large company that still appears on growth stock screens. Indeed, one of the better screens out there, Joel Greenblatt’s Magic Formula, places Apple alongside much smaller growth companies. Various screens at the American Association of Individual Investors also flash Apple as an intriguing growth at a reasonable price stock.

Adding to Apple’s share potential is the recent decision to buy back approximately $60 billion (yes, billion with a “b”) worth of its stock. Reducing the float by that much from an approximately $400 billion market cap should have positive results on share price, even if the company fails to grow going forward. There is a 2.7%  dividend to boot.

Foolish Bottom Line

With Apple placing first or second in so many technology segments, offering multiple avenues for sustained earnings and having a cheap valuation, I am punching the card for Apple in the large-cap portion of my portfolio.

Kirk Spano and clients of Bluemound Asset Management, LLC have long positions in Apple stock. The Motley Fool recommends Amazon.com and Apple. The Motley Fool owns shares of Amazon.com and Apple. Kirk is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Is Apple Still a Punch Card Stock? originally appeared on Fool.com is written by Kirk Spano.

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