Apple Inc. (AAPL), Microsoft Corporation (MSFT): In The End, Icahn Is Right

In the end, Icahn is right
Apple Inc. (NASDAQ:AAPL) appears to be as close to a no-brainer as a stock can get. The market pessimism over the company’s future has gone way too far. At its current valuation of 11 times trailing earnings, Apple’s iPhone sales would have to fall off a cliff for investors to not earn at least a reasonable rate of return going forward. Sure, it’s unlikely Apple will repeat the same type of growth trajectory that propelled it to the top spot among the world’s most valuable companies by market cap. But, calls for Apple’s demise are far too irrational, and at the same time, there’s no denying the math.

Apple Inc. (NASDAQ:AAPL)’s gigantic buyback, in addition to a hefty 2.7% dividend yield plus likely double-digit dividend growth over time means investors have multiple layers of safety embedded into Apple’s already discounted valuation. In total, Apple plans to return $100 billion to shareholders over the next three years through a combination of dividends and share buybacks.  And, let’s not forget the $147 billion in cash, equivalents, and marketable investments on its books, implying an even bigger margin of safety. There’s simply a far too compelling risk-reward proposition to not own shares of Apple. While I don’t always agree with Uncle Carl, but on this particular stock, I think he’s right on the money.

The article This Tech Stock Really Is a “No-Brainer” originally appeared on Fool.com.

Robert Ciura owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple, China Mobile, and Microsoft. 

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