The Latest Reason to Buy Apple Inc. (AAPL) Stock

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No, not Steve Jobs. Rather, Apple Inc. (NASDAQ:AAPL) is establishing a $1 billion fund to create more U.S. advanced manufacturing jobs. What’s good for the country is also good for Apple stock.

The Latest Reason to Buy Apple Inc. (AAPL) Stock

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Apple CEO Tim Cook made this surprise announcement May 3 while appearing on CNBC’s Mad Money. Cook told Jim Cramer that it was undertaking this initiative to give back to America.

“By doing that, we can be the ripple in the pond,” Cook told Cramer. “Those manufacturing jobs create more jobs around them because you have a service industry that builds up around them.”

It’s a very timely conversation considering Apple stock has just gone over $800 billion in market cap while Warren Buffett justifies the blitzkrieg-like cost-cutting undertaken by his Brazilian partners at 3G Capital.

Good vs. Evil

So who’s right? Should corporations have values or are they just legal entities that are in the business of making money for shareholders? Cook apparently feels it’s the former.

“A lot of people ask me, ‘Do you think it’s a company’s job to create jobs?’ and my response is [that] a company should have values because a company is a collection of people,” Cook told Cramer. “And people should have values, so by extension, a company should. And one of the things you do is give back.”

That’s a lesson my grandfather, himself a successful businessperson, taught me as a young child. Do what you can, whenever you can, and however, you can, to help people in need of your assistance. It’s stuck with me to this very day.

So, if you own Apple stock, as Buffett ironically does, you should be delighted to hear Cook make these statements. In the past, people such as Donald Trump have criticized Cook for not doing enough to create jobs here in the U.S. Now, he’s putting Apple’s money where its mouth is.

Regardless of Apple’s latest funding initiative, the company has an enormously positive effect on the U.S. economy. It recently launched a website to remind Americans about that contribution which includes 80,000 employees working directly for Apple in the U.S., 450,000 jobs at U.S.-based suppliers and 1.5 million spinoff jobs created because Apple is based in California.

What has Kraft Heinz Co (NYSE:KHC) done on this score?

It’s All About Productivity

Well, according to its 10-K, KHC has 41,000 employees working at 87 manufacturing and processing plants around the world (44 outside U.S.), its co-headquarters in Pittsburgh and Chicago and various regional offices in the U.S. and elsewhere.

So, let’s assume that 30% of its employees work outside the U.S. (non-U.S. revenue in 2016 was approximately 30% of its overall revenue), that means Kraft Heinz employs 28,700 people in the U.S., 64% fewer people than Apple.

But I doubt you’re going to see Kraft Heinz creating a job-creation fund of any dollar amount because that wouldn’t increase productivity, a key driver of American growth, Buffett pointed out this past weekend:

“Now, the 3G people do it very fast and they’re very good at making a business productive with fewer people than operated before, but we’ve been doing that in every industry, whether it’s steel, cars, or you name it and that’s why we live as well as we do.”

I’m a huge fan of Warren Buffett’s, and the one thing I’ve learned about the man is he’s very adaptive and not stuck in his ways. He’s come to understand that there’s more than one way to do things and while the 3G way might be harsh, it’s not wrongheaded business practices. Sometimes, companies do hire too many people.

Bottom Line Apple Stock

If you own Apple stock, I think it’s fair to say that you hold shares in a company that’s constantly thinking about the bigger picture, whether it be creating more U.S. jobs or the next great product Americans will love.

I’m not saying you shouldn’t own Kraft Heinz stock, but 3G Capital is a private equity firm, and private equity firms have only one thing in mind when buying a company: How fast can we turn a dime?

Of course, Kraft Heinz can prove me wrong and add some money to Apple’s jobs initiative. I’m sure Tim Cook wouldn’t have a problem. For me, this is just one more reason to stay long Apple stock.

As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.


Article printed from InvestorPlace Media, https://investorplace.com/2017/05/the-latest-reason-to-buy-apple-inc-aapl-stock/.

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