Tech to Buy: Apple
So what should you trade in your MSFT shares for? I’ll start with the obvious pick, and I will be brief. I believe Apple remains a bargain even at $600 a share, with my top reasons being:
- Apple’s new dividend will total $2.65 per quarter, payable in July, and deliver a current yield of about 1.8%. The dividend is coupled with a $10 billion buyback plan for AAPL stock.
- The “new iPad” isn’t revolutionary but will tighten Apple’s stranglehold on the tablet market — especially when partnered with a price cut for the iPad 2 to just $399.
- Despite a stumble late last year, the Apple first-quarter earnings report in January blew the doors off as profits rose 118%. That proves Apple still has the ability to post amazing growth — even with its current size.
- Although AAPL stock has seen a breakneck run, it still is reasonably valued based on earnings of $49 per share for fiscal 2013. That’s a forward P/E of 12.2, right in the ballpark of your typical S&P blue chip right now.
- It’s not just suckers like me buying Apple. In early March, Barclays Capital bumped its 12-month price target on Apple stock up to $710 per share — before the iPad news and before the dividend news. In short, the “smart money” will continue to chase this stock in the months ahead.