This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

What Apple Can Do to Spark Its Shares

NEW YORK ( TheStreet) -- Will this be the quarter Apple (AAPL - Get Report) goes through a stock split and raises its dividend?

First-quarter earnings season kicks off in a couple of weeks. The comparisons will be tough. The consensus estimate is for a year-over-year decline of 0.7% for the S&P 500. Apple earnings, once an investor darling, are expected to shrink from $12.30 to $10.15, a whopping 8% decline (shares are down roughly 30% over the past year).

At the same time, according to Bloomberg estimates, the 100-plus analysts covering the company expect Apple's revenue to grow by over 70% over the next three years, all while the stock is trading with a forward P/E below 10X.

Clearly, fundamentals aren't the key driver of this company's stock price.

Some, me included, argue that the selloff in Apple shares is overdone. But the real question for investors is what will turn things around for the stock?

In recent interviews and press conferences, Apple CEO Tim Cook has attempted to reassure investors the company will make good use of its large cash stock pile -- over $130 billion by the end of 2012.

Is a share buyback program in the works? Will Apple's dividend be raised? How about a stock split? In my opinion, yes, yes and yes.

Apple is a cash cow. It generates over $25 billion in free cash flow every quarter. The company is a sales machine, selling more iPhones than cars sold by all of the major car manufacturers globally.

Most importantly, the company continues to innovate. But to no avail for the stock price in the past 12 months. What Apple stock needs is a traditional boost from higher dividends and the psychological impact of a stock split. Imagine Apple shares trading at $45 (after a 10-for-1 stock split), and paying a $1.33 dividend per share (a 25% hike from current levels). Oh, and what if the company spent 15% of its cash (about $26 billion) to buy back its shares?
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $122.99 0.00%
FB $96.99 0.00%
GOOG $631.93 0.00%
TSLA $263.82 0.00%
YHOO $37.67 0.00%

Markets

Chart of I:DJI
DOW 17,751.39 +121.12 0.69%
S&P 500 2,108.57 +15.32 0.73%
NASDAQ 5,111.7330 +22.5270 0.44%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs