More Squawk From Jim Cramer: Berkshire Stake Gives Apple (AAPL) Stock a Floor

There is a body of evidence around Apple (AAPL) that is so negative Wall Street is hesitant to credit Warren Buffett with Berkshire Hathaway's (BRK.A, BRK.B) stake, Jim Cramer says.

Author:: Rachel Graf
Publish date:: May 16, 2016 12:14 PM EDT

NEW YORK (TheStreet) -- Apple (AAPL) - Get Report stock is advancing 3.57% to $93.75 in early-afternoon trading on Monday after Warren Buffett's Berkshire Hathaway (BRK.A, BRK.B) disclosed that it owns 9.81 million shares in the iPhone maker.

The 0.2% stake is valued at roughly $1.07 billion, the Wall Street Journal reports. But the investment was made by Berkshire portfolio managers Todd Combs and Ted Weschler rather than by Buffett himself.

"It's still Buffett's money for heaven's stake," TheStreet's Jim Cramer said on CNBC's "Squawk on the Street" this morning. "It wasn't like Buffett said, you know what you two stooges go buy whatever you want; I don't want to know about it."

He noted that Apple stock is so hated right now that no one wants to credit Buffett with the purchase. Shares have plunged in recent weeks as downbeat earnings from Asia-based iPhone component makers exacerbated concerns about slowing iPhone demand.

Underscoring this negativity, Citigroup (C) released a note about Apple supplier Skyworks (SWKS) earlier today contending that sales of the upcoming iPhone 7 will be weaker than expected.

"To determine weaker-than-expected sales in the month of May is amazing," Cramer mentioned.

He added that the analysts might as well say that the iPhone 9 is a failure and any upcoming Apple cars don't work.

Apple stock is valued at nine times earnings, which typically indicates that investors believe earnings won't come through, Cramer explains in the above video. Although be believes that Berkshire's stake marks a floor for the stock, he reiterated that many people remain skeptical about the company.

"Just be aware that the halo must come from earnings, and anything that is about Buffett will be forgotten about by Friday," he said.

Apple and Disney (DIS) are two of the most disliked stocks right now, Cramer pointed out this morning.

Earlier this month, billionaire Carl Icahn dumped all of his stock in Apple largely on concerns about China's cautious attitude toward the company. But CEO Tim Cook is currently visiting China to meet with app developers in an attempt to reinvigorate sales in the area, and Apple last week announced a rare $1 billion investment in Chinese car ride hailing app Didi Chuxing.

Many people believe that Apple mostly makes parts in China, but there are people who have made billions from app store purchases by Chinese consumers.

"Remember this is a continual theme about the service economy and how people in China benefited from it too," Cramer mentioned in a video this morning. "Hoping that the government recognizes that Apple is not a pernicious force but a force of good."

(Apple is held in Jim Cramer's charitable trust Action Alerts PLUS. See all of his holdings with a free trial.)

Separately, TheStreet Ratings team rates the stock as a "buy" with a ratings score of B.

Apple's strengths such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins outweigh the fact that the company shows weak operating cash flow.

You can view the full analysis from the report here: AAPL

TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.