Warren Buffett's reason for investing in Apple should be music to Tim Cook's ears

Filed under: Finance, Business, People

Billionaire investor Warren Buffett likes Apple: In an interview on CNBC on Monday, he revealed his company, Berkshire Hathaway, had doubled its holding in Apple, bringing its stake to $18 billion, or 133 million shares.

A perfect fit

• A low valuation. Apple's forward price-to-earnings ratio, a way to gauge how expensive a stock is, is currently at 14.6 — significantly lower than other tech companies like Google, Microsoft, and Amazon, which have PE ratios that suggest massive future growth.
• Regular and predictable dividends and buybacks. Apple has paid out more than $4 per share in dividends over the past two years, and has bought back 760 million shares since 2013. Apple spent nearly $11 billion in the 4th quarter of 2016 on buybacks alone.
• A strong consumer brand. According to a recent survey by Brand Finance, Apple has the second most valuable brand in the world, behind only Google.

The feeling is mutual

When I take my great-grandchildren to Dairy Queen they bring along friends sometimes. They've all got a iPhone and, you know, I ask 'em what they do with it and how ... whether they could live without it, and when they trade it in what they're gonna do with it. And of course, I see when they come to the furniture mart that people have this incredible stickiness of — with the product. I mean, if they bring in an iPhone, they buy a new iPhone. I mean, they're ... it just has that quality. It gets built into their lives.

• Warren Buffett's Berkshire Hathaway has more than doubled its stake in Apple
• How to get the most out of voice dictation, one of the iPhone's most underrated features
• Al Gore just sold $29 million of Apple stock

Read more...

Permalink | Email this | Linking Blogs | Comments