After billionaire investor Carl Icahn announced a stake in the
Apple (Nasdaq: AAPL)
shares jumped nearly 5%.
The 77-year old activist investor announced his position on
Twitter two days ago: "
We currently have a large position in APPLE. We believe the
company to be extremely undervalued. Spoke to Tim Cook today.
More to come
The Wall Street Journal
reports that he's been building his $1.5 billion stake in Apple
over the last month. What's his outlook? Icahn says,
"Even without earnings growth, we think it ought to be worth
He's recommending that CEO Tim Cook increase the record $60
billion share buyback program. Doing so would decrease the number
of Apple shares, and raise the EPS.
This is just the latest news that helped lift Apple shares by
more than 100-points. The stock is now up 27% since its July lows
of $393, marking a big comeback for the tech giant.
I've been bullish on Apple shares. In
The Truth About Apple
, I told
Income & Prosperity
"Like all big tech companies, Apple has matured. The
idea that innovation at Apple died with Jobs doesn't sit well
While Apple will continue to innovate and create new
products, it doesn't really matter. Because Apple's stock
price reflects a stale business that will never grow
In that June 18 email, I advised readers to buy Apple
stock. Here's exactly what I said.
Value and income investors alike should love the stock,
thanks to the shareholder-friendly initiatives and the cheap
At $432, now is the perfect time to buy Apple shares. The
stock is cheap, with a P/E just north of 10. The company's
growth is superior to most companies of its size. And the
balance sheet is pristine, with more cash than many
Apple may not have the high dividend yield that most income
investors seek. But you should be attracted to the growing
dividend, huge share buyback program and the cheap stock.
I've personally owned Apple shares since 2010. The
decline of Apple shares from $700 to less than $400 was
painful. But like many Apple shareholders, I kept every one
of my shares.
In fact, I even violated a crucial investing rule:
don't try to catch a falling knife
. Even as Apple shares plunged, I bought a little more stock in
January at $508 and February at $459. Averaging down can be a
mistake…but it occasionally creates big profits.
Just eight days after telling
Income & Prosperity
readers to buy Apple shares, I made a big move. I
doubled-down on Apple in late June, and bought a sizable position
at $398. Those shares are now up 25% in less than two
Why did I buy Apple at that time? The reason is simple. I
looked at Apple and saw value. The stock was trading
at just 10x earnings. That's cheap for any company.
And when you get a chance to buy a
company at a bargain price, you snap it up.
Plus, I'm an Apple customer who loves the products. My iPhone,
MacBook, iPad, and iTunes are all intertwined in the Apple
ecosystem. Like millions around the world, I'm a customer for
That's why, when I saw Apple briefly dip below $400, I pulled
the trigger. At the time, there was rampant pessimism. And
that can be a sign of a bottom.
Apple shares are now up considerably. But the stock is still
cheap. On an enterprise value basis - which removes the value of
the company's cash - shares trade at a multiple of just 9x this
year's earnings estimates. That's a 45% discount to the S&P
My view on Apple hasn't changed.
"Apple is truly a unique opportunity to buy a world-class
company at a very reasonable price. With the stock market near
all-time highs, Apple certainly appears attractive.
Especially when you consider the potential for substantial gains
if the company unveils another device that changes the
If you're looking for value in this rising stock market, look
no further. You've found a great bargain in Apple shares.
That's why Carl Icahn is buying Apple shares. I hope you've
done the same…
Do you own Apple stock? Have you been buying more shares
recently? And do you think Icahn can convince Tim Cook to buy
back more stock? I want to hear your thoughts - my email is