This Day On The Street
Continue to site right-arrow
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
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Is Apple a Value Stock or Growth Stock?

Stocks in this article: AAPLBBRYNOKGOOGDELL

NEW YORK ( TheStreet) -- For several years, investors bought Apple (AAPL) shares for the growth prospect while I liked the numbers from a value point of view. Many rightly justified the purchases with explanations of removing the cash to calculate the true price to earnings ratio (rarely a smart idea without discounting the cash.)


During the last six months, I witnessed a shift from a growth thesis to a more investment thesis. I found it fascinating, because the more I read that Apple was a great value play, the more I started to think of it as a growth stock. It's almost as if many of the long bias followers and I are 180 degrees out of phase.

On the other hand, you have the short thesis. According to the shorts, Apple is done, and the only thing left to do is sell out of Apple and buy Research In Motion (BBBY) or Nokia (NOK).

Often the gurus in the short bias group will point out that they think Apple faces shrinking margins and that Google's (GOOG) Android based phones are gaining market share. To be fair, Apple may actually come under margin pressure, although last quarter is not a good example of it.

Last quarter, Apple introduced several new products, and as someone who spent years manufacturing and importing products, I know the first quarter or two are the toughest ones from a profit perspective. If Apple launched as many products as they did without a margin hit, they unquestionably would be able to walk on water. Apple can't walk on water, but then again, they don't need to.

Apple doesn't have a margin problem and if margins do shrink they still don't probably have a margin problem. Where else are you going to get a large tech company with Apple's margins? I will save you the trouble; you're not going to find another company with the wide margins Apple enjoys.


AAPL Profit Margin TTM Chart AAPL Profit Margin TTM data by YCharts

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,879.35 +51.60 0.29%
S&P 500 2,072.11 -0.72 -0.03%
NASDAQ 4,806.6980 +19.3810 0.40%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs