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Apple Pullback Entices Fund Managers

Apple comments from Kenjol Capital and McGervey Wealth Management added in this update.

BOSTON ( TheStreet) -- Apple (AAPL - Get Report) shares are sliding after the tech giant posted record revenue and earnings, which several fund managers say is a buying opportunity even as the stock remains near its all-time high.

Among the highlights of Apple's fiscal fourth quarter report, the company saw revenue surge to $20.34 billion from $12.21 billion in the year ago quarter. Net profit climbed to $4.31 billion, or $4.64 a share, from year-ago earnings of $2.53 billion, or $2.77 billion. Apple said international sales accounted for 57% of revenue in the quarter.
Apple Store

Investors sold shares, though, as the gross margin of 36.9% was down from 41.8% in the year-ago period. And while Apple posted better-than-expected sales numbers for the Mac and iPhone, the company sold 4.2 million iPads, which was below Wall Street's target of 4.8 million.

Shares of Apple fell as low as $300.02 earlier in Tuesday's session and are lately down 3% to $308.68. The stock hit a record $319 on Monday ahead of the release of the fiscal fourth-quarter earnings report.

That pullback, though, has presented investors with a buying opportunity, several fund managers say. Herb Chen, portfolio manager of the Huntington Growth Fund based in Columbus, Ohio, says that "this is a great buying opportunity, and [I] would buy more."

"I consider Apple to be one of the most innovative technology firms and [it] is currently one of my largest holdings in the Huntington Growth Fund," Chen says. Apple represents a 6%, or $7.75 million, position in the Huntington Growth Fund (HGWIX).

Chen says that even though gross margins and iPad sales disappointed, he is a firm believer in Apple. "iPad expectations were sky high, iPad is just in its infancy, and iPad will dominate," he says. "Moreover, Apple's iPhone and Mac fourth quarter sales exceeded expectations. I am looking forward to see what happens during the holiday season."

Jim Meyer, chief investment officer at West Conshohocken, Pa.-based Tower Bridge Advisors, says investors are likely overreacting to the lower-than-expected sales number for the iPad device.

"The iPad number being light had nothing to do with lack of demand. It's just a function of getting a new product out the door with enough quantity," Meyer says. "If that's the worst problem you have, that's pretty good."

Meyer says that Tower Bridge, which has $850 million in assets under management, has allocated somewhere between $1 million and $10 million to Apple shares. He notes that Apple is still attractive but will face difficulty going forward due to the large market cap.
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