Apple's high per-share price holds it back and perpetuates the undervalued status. It's so silly on many levels. When you invest in a company in today's electronic markets, it makes no difference if you trade in odd-lots or not (an odd lot is a buy or sale of less than an even 100 shares).
A well-performing stock with a high per share price is even a better buy than the numbers otherwise indicate. Why so? Because it's well-known that stocks tend to move higher after splitting.
The logic is real, but it's based on irrational emotion. A company is not actually more attractive because the shares are more "affordable." However, because of the effectiveness, companies continue to use this old "Jedi mind" trick.
If Apple declares a stock split, expect a strong bullish reaction relative to the ratio, and for Apple to narrow the "true" relative value gap.
article on smartphones
is a must read. (You need a Real Money Pro account to read, but Versace's analysis makes it worthwhile.)
AT&T(T - Get Report)
I have a secret to admit. I don't care for Ma Bell, and it dates back before cellphones became popular. Back in the day, when phones had "strings" attached to them AT&T held a strong monopoly and it acted like it.
With that said, I have no problems buying (or shorting) AT&T. My personal feelings don't receive consideration in regards to capital allocation.
AT&T traded lower Monday and Tuesday as of the time of this writing. If Wednesday is lower we are in "the kill zone" (thanks Oliver Stone). We can also see from last week's move lower that a buy after three down days is already a winner.
The price-to-earnings multiple already discounts AT&T growth, resulting in a free ride if the company's revenue continues growing. Earnings in 2011 are lower, but if you drill down to the quarter periods you can see the hit taken appears to be a one-time reduction.
Based on $2.40 in estimated earnings this year, AT&T is expected to maintain or increase the sky-high yield of 4.8%. Even in the turmoil that wrecked the financial markets, AT&T continued to increase their dividend. In the last five years, the dividend has increased by an average of 5.3% per year.