It's not often that you get to see real-time updates on what analysts are buying and selling -- all for free. But with The Motley Fool's Real-Money Stock Picking program, you can do just that. And based on activity the last few weeks, one thing is clear: Apple (NASDAQ:AAPL) is cheap, and our analysts are buying up Apple stock right now!
Obstacles ahead? Yes. End times? No.
Fool analyst Anand Chokkavelu doesn't necessarily think the sell-off of Apple stock is unwarranted. He readily admits that Apple is "a company that faces increased competition and margin compression in an industry that knocks off the King of the Hill on a frequent, if unpredictable, basis."
That being said, he thinks that it's worth considering what Apple is selling for right now, compared with the broader S&P 500. Apple's price-to-earnings ratio is hovering around 11, and the stock offers a 2.7% dividend yield. The average S&P 500 company, on the other hand, is trading for 18 times earnings and is paying out a 2.1% yield.
In other words, the market is selling for a 64% premium to Apple and offering a dividend that's 22% lower than Apple's. Given the company's dominant brand, its leadership team, and its opportunities, Anand thinks the market is overblowing the slowdown in Apple's growth.
Making some prosocial changes
Fool analyst Alyce Lomax takes a more nuanced approach to evaluating Apple stock. Like Anand, Alyce starts off by noting that the stock itself is simply dirt cheap.
But Alyce has built her personal portfolio around companies that encourage prosocial behavior. In the past, Alyce has been wary of putting her money behind Apple because of concerns about corporate governance, and its labor situation with Foxconn in China.
Lately, however, Alyce has seen signs of positive changes. Among those changes: more transparency with issues at Foxconn, an announcement that manufacturing of Macs will be coming back to America, and a vow to power every Apple facility with 100% renewable energy.
What's a Fool to do?
I have to agree with both analysts. The stock is cheap, and the company seems to be making positive, prosocial changes. Having said that, I'm worried that the competitive advantage that brought Apple to its greatness was the genius of Steve Jobs.
Barring a game-changing product release -- as the iPod, iPhone, and iPad were when introduced to the public -- holding Apple shares has involved a change in theses for me. Instead of investing in innovation, holding my shares represents investing in the Apple ecosystem.
As users buy one Apple product, they're more likely to buy others, so that they can all sync with one another. iCloud and the iTunes store go a long way in reinforcing this ecosystem. Someone who holds all of his or her information on Apple products has a strong motivation to buy Apple when the time for replacement comes.
But while acknowledging the strength of this ecosystem, I'm not entirely convinced that Apple stock is the best place for my money.