Apple deserves a huge portion in investors' portfolio - analysts

By IVCPOST Staff Reporter

Jul 31, 2013 05:33 AM EDT

For years, Apple experienced growth rates that constantly exceeded 30%. Apple's iPad, iPhone, iPod and iTunes took the attention of millions of people. The company was also able to develop Macintosh which helped it attain success but in the previous quarter, its growth went under 1%. Conversely, analysts still said that Apple is worthy to be in an investor's portfolio.

Apple owned a trailing P/E ratio of around 11 and a forward looking ratio of around 10. In contrast with S&P 500's 19 P/E, Apple measures up favourably to most of the markets. Price-Earnings ratio is defined as the valuation ratio of a corporation's current stock price in contrast to its earnings per share. Every now and then, the P/E ratio is called the multiple since it signifies how much venture capitalists are eager to pay for each dollar of earnings. Moreover, the company always appears on the growth stock screens. The Magic Formula of Joel Greenblatt still flashes Apple next to corporations that show growth. Several screens at the American Association of Individual Investors also exhibit Apple as an interesting growth at an affordable price stock.

In addition to the tech titan's stock potential, Apple also paid around US$60 billion to buy back its own stocks. The reduction of float from roughly US$400 billion market cap was expected to show positive results on the stock price even if Apple failed to grow. Analysts said that there was 2.7% dividend to boot.

Also, the company could attain first or second place in various technology segments. This would offer multiple avenues for sustained revenues and getting a cheap valuation. Analysts believed that these reasons were enough for Apple to get a portion in investors' portfolio.

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