Tags: Kass | bullish | Apple | shares

Doug Kass: 4 Reasons Why I’m Bullish on Apple

By Dan Weil   |   Friday, 15 Mar 2013 08:41 AM

Apple shares have really hit the skids over the past six months, but hedge fund manager Doug Kass has turned from bear to bull in the process.

The shares have dropped from a high of $705 Sept. 21 to a low of $419 March 4. That’s a 41 percent move. Apple closed at $432.50 Thursday.

“The stock is turning much more attractive on a risk-reward basis,” he explains.

Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.

Kass, president of Seabreeze Asset Management, offers CNBC four reasons why he likes Apple.
• “Its stable of applications and products will remain a dominant factor in the marketplace.”

• “The company’s product offerings are going to improve. They’re going to upgrade their portfolio. They’re going to continue to innovate. Memories are short. Wall Street, in its impatience, has quickly forgotten Apple’s history of innovation.”

• “Apple has huge free cash flow generation, even with lower profits and lower profit margins.”

• “They’re very close to a more generous return of capital, a decision that might occur in the next couple days.” Recall that it was just about a year ago, March 19, 2012, that Apple began its dividend and share buyback program, Kass says.

Standard & Poor’s analyst Scott Kessler gives Apple a top, five-star rating, with a 12-month price target of $600 he set Jan. 28.

“We expect Apple’s growth to exceed that of many of its peers, and considering its substantial cash position, we see the stock as a compelling value,” he wrote when the stock traded at $450 in a report obtained by Moneynews.

“Despite macroeconomic and competitive threats, we think sales of iPhones and iPads will continue to grow at a healthy pace through fiscal 2015,” which ends Sept. 30 that year.

Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.

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