Tinconderoga picks Apple as top stock for 2nd year running
updated 12:15 pm EST, Tue January 3, 2012
Assumes iTV, iPad mini in development
Ticonderoga Securities is making Apple its top stock pick for the second year in a row, according to one of the firm's analysts, Brian White. Apple is said to have had the best performance of the 20 companies Ticonderoga covers, growing 26 percent. "We believe Apple's portfolio in 2012 has the opportunity to create more excitement around the story with our expectation for the unveiling of iTV, a 'iPad mini' and a major upgrade with the iPhone 5, while we expect the company to finally come to grips with its surging cash balance and issue its first cash dividend," White remarks in a new memo.
While an iPhone 5 and an Apple-branded TV are widely anticipated, though, the prospects for an iPad mini and/or a cash dividend may be low. Little evidence has emerged to support the existence of a smaller iPad, and Apple has not only operated without dividends but actively resisted them. Executives -- including former CEO Steve Jobs -- have stated they want to save cash reserves for major strategic plans, typically meaning business acquisitions or supply deals.
White also mentions though that Apple has proven tougher than most technology companies when coping with a bad economy, something that may continue to help it in 2012. The company has shown strong growth even as other tech companies slow or fall back based on demand.
Fresh-Faced Recruit
Joined: Sep 2001
a dividend?
while i'd cream my jeans over that (a modest 3% dividend would pay $12/share, $5000 free money for me every year), it's not very likely to happen in the near future, if ever.
1) tech companies rarely pay dividends. Microsoft does it; it's also a crppy tech stock to own if you expect the kind of growth that tech investors expect.
2) when you institute a dividend, you're stuck paying it out forever; a stock is punished severely for ending a dividend. What's more, dividends are expected to grow over time. So, once Apple instituted a dividend, the same analysts crying out for one would start whining within 24 months about why Apple wasn't raising its dividend.
3) in general, dividends are better suited to stocks of companies which don't experience high volatility in their markets and revenue. Utilities and established consumer product companies are generally slow, steady plodders - they are stocks you buy for investing for the long term, so paying a dividend makes sense for such investors. Such companies also have fairly steady, reliable revenues and so it's safe for them to commit to a dividend. Someday, Apple may need that big fat cash bankroll. I hope that day never comes, but it could. Analysts arguing for a dividend are trying to say that Apple is both a consumer products company AND a high tech company.
4) actually having that big, fat bank account is a huge plus for Apple. It tells competitors like Google that whatever they want to bid for, say, Kodak's patents or RIM's patents... they can outbid them if they want. People who focus on the fact that Apple is actually earning a negative rate of return on the cash and liquid securities of that $80 billion+ bankroll are missing the forest for the trees.
5) Finally, I want Apple to focus on continuing to make insanely great products and dominating the markets they enter, not manipulating the stock price.