Bert Dohmen, president of Dohmen Capital Research thinks Apple (AAPL)’s ride will come to an end in 2015.
In a CNBC interview he warned the stock may have reached its peak: “It’s losing market share like crazy. It’s becoming a one-trick pony…it’s a phone company,” he said.
Dohmen’s argument is based on the fact that Cupertino is becoming overly reliant on its iPhones when it comes to generating revs, as the iPhone now accounts for almost two-thirds of the co.’s profits. Dohmen pointed out however, that he is bullish on AAPL short term—but only because of Cupertino’s “financial engineering” in the form of stock buybacks.
“I’m bullish for the stock into year end. It should be strong because this is when most of the stock buybacks are done by companies,” he explained.
Granite Investment Advisors’ Timothy Lesko disagrees, saying he likes the stock of the largest S&P component and that he sees nothing wrong with the tech giant’s stock buyback program or its future.
“Apple is selling more devices now than it did last year and they are selling them at margins that have held up,” he said.
“They may be losing low-end market share in cell phones, but they own the high end.”
Furthermore, Lesko pointed out the fact AAPL is trading at a low PE ratio. Apple shares are currently priced at 17.70x this year’s forecasted earnings, compared to the industry’s 25.92x earnings multiple. Ticker has a PEG and forward P/E ratio of 1.31 and 13.48, respectively. Price/sales for the same period is 3.62 while EPS is $6.45.
“The story’s intact, the company’s returning cash to shareholders and the valuation is where you want it,” Lesko said.
Shares of Apple closed at $114.40 on Friday. The name is up 54.51% year-over-year, and 45.47% year-to-date.