Apple Bears Fruit: Widows, Orphans Take Note

NEW YORK (TheStreet) -- We like to think of the tech titans in Silicon Valley as as being new, young, quite unlike the stodgy industrial giants of a previous age.

But Apple (AAPL), which in some ways started the tech boom, has now been public for 33 years.  That's a third of a century.

As was said of General Motors  (GM) in the 1950s, when its Detroit headquarters was about the same age, what's good for Apple is good for the U.S.A.

Apple has become a giant, a bellwether for the tech sector, and a major force in keeping an American advantage in the global tech marketplace. Apple is the best bet for "widow and orphan" investors who want dependable dividends and security in retirement. Steve Jobs and Steve Wozniak's baby is all grown up.

Some say this has been a tough year for Apple, but it's ending in triumph. Counterpoint Research says the iPhone 5 and 5s are pounding their rivals from Samsung, and that three of the top four selling phones in the world are now made by Apple. Apple also beat Samsung in this round of a patent lawsuit in Korea.

Apple even has 10% of the phone market in China, and that's just as China Mobile (CHL) , the nation's largest carrier with an estimated 700 million subscribers, starts taking pre-orders. Counterpoint's graph of monthly market share shows Apple as a hockey stick, pointed straight up. Apple is still in third place in overall market share behind Samsung and Lenovo, but it's in third place with a bullet.

For those who bought Apple in the spring or summer, when it bottomed out near $400 a share, their patience has been rewarded. It's now at $560. Even at that price it's something of a bargain, with a below-market price-to-earnings multiple of 14.15 and a yield of 2.18%.

According to the annual list of the Fortune 500, Apple is by far America's biggest tech company. It's more than two times bigger than IBM (IBM), bigger than GM itself, and is far-and-away the most profitable name on the board, bringing $1 of every $4 in sales to the net income line.

During 2013, a lot of analysts fretted that Apple was losing its edge in the tablet market. A November survey from Changewave shows 72% of tablet buyers this Christmas intend to buy iPads. That's up from 55% in the summer survey. Ho-ho-ho!

While there remain naysayers on Apple, you won't find many on our staff. As Rocco Pendola told us in September, the negative media on Apple was false. He was right.

Under CEO Tim Cook, Apple is about as transparent as Alan Greenspan's Federal Reserve. It doesn't respond to rumors. It doesn't respond to competitors. It acts and makes competitors respond to it.

Even before its latest run of success, Apple was by far the most profitable name in the mobile technology game. This led many analysts, including this reporter, to write that Apple was letting Google (GOOG) and its Android do to its mobile products exactly what it had let Microsoft (MSFT) Windows do to its PCs 20 years ago -- seize the market with a more open platform.

But this is not 1989. All players source their products in pretty much the same way, through contracts with Chinese suppliers and assembly companies. There is no bottleneck on Apple quality and Apple design. While there is a premium paid for Apple products, most of that premium goes to the bottom line. Apple's financial strength lets it dominate the channel from its source to its end, in the consumer's hand.

Let me conclude with some full disclosure. I missed the last big move in Apple, the one that took it to $700 per share during the summer of 2012. I started buying on the dip, which turned into the collapse, and I kept buying until, this summer, Apple represented more than 10% of my retirement portfolio.

I could say I knew it all along, but I was playing a hunch. Apple's volatility was created in part by its size. Getting a substantial stake meant committing a lot of any firm's capital to the stock, and the fall in late 2012 showed that to be risky. You don't want to place all your bets on one horse.

That's why I call it a "widows and orphans" stock. It's something you need to own a little of for security, not a lot of for speculation. Apple's price will fluctuate from here. It will go down as well as up. But I think it will mostly go up.

Like GM, back in the day.

At the time of publication the author owned shares of AAPL and GOOG.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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