Contrarian investor and Dohmen Capital Research Group founder Bert Dohmen appeared on CNBC’s “Closing Bell” to discuss whether or not it’s a good idea to invest in Apple Inc. (NASDAQ:AAPL) stock to which, Dohmen bluntly said, “You’d have to be ‘deaf, dumb and blind” to buy the name.
Although Apple has been performing poorly in the past 52 weeks, the Cupertino tech giant is steadily rebounding, gaining 3.92% year-to-date vs. the S&P 500’s 6.5% gain for the same period. Last month, Apple shares jumped to more than 10%. Ticker has advanced nearly 18% in the past three months.
Despite the rebound after its last earnings report, the investor said he wouldn’t touch Apple stock with a 10-foot pole, adding, “The deterioration is accelerating.” Since 2014, the tech firm’s revenue has been disappointing every quarter, “worse than the one before” Dohmen added.
Last Monday, Warren Buffet’s Berkshire Hathaway disclosed that it increases its stake in the tech giant by 55% and now owns a little more than 15 million shares.
Piper Jaffray analyst Gene Munster appeared alongside Dohmen on the show. He said that although he remains bullish on Apple’s prospects, the near term of the iPhone cycle is likely to boost shares. Munster also placed a $151 price target on the stock. He predicts that Apple’s revenue will be up 10% next year as users upgrade to the new iPhone.
“They’ve had a difficult period. I think it has nothing to do with their core strength of coming out with great devices, and I think they’re going to continue on that path for the next five years,” Munster told “Closing Bell.” “That gives some optimism for investors that this isn’t just a one-year trade. There’s some groundwork that could help it get into big growth markets in the future.”
Dohmen noted that iPhone sales have been down 15% in the last quarter and the profits are also down by 27%. He added that despite entering the Chinese market – a supposed big money maker – Apple sales were down 33%.
Although investors are focused on Apple’s upcoming flagship smartphone and the potential for a supercycle in 2017, Munster believes that the rumored entry to augmented reality and automotive sometime in 2018 will do wonders for the tech giant’s performance on the market.
“That would be constructive if we bought stocks based on things that happened in the past, but I think investors tend to look at what goes on in the future,” he explained.
But Dohmen thinks otherwise. He said Apple hasn’t been betting big on innovation for some time and this is one of the reasons for the company’s plummeting stock price. Instead, the firm has been investing its own money and borrowed money into “paying dividends and buying back its stock.”
“This is not innovation. It’s financial engineering,” he said.
AAPL closed Tuesday’s regular trading at $109.39, down $0.09, or 0.08 percent. However, in pre-market hours, the shares gained $0.26, or 0.24 percent.
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