Technology

Apple Inc. A Worse Investment Than Russia: Expert

Apple is apparently less enticing to one expert than Russia’s MICEX Index due to the two investments’ valuations. Russian stocks have been highly volatile as the ruble struggles amid continuing problems between Russia and Ukraine.

Apple Inc. A Worse Investment Than Russia: Expert

Russian stocks struggle

Bloomberg reports that Russian stocks have now seen their biggest annual loss since 2008. The weakening ruble, Western sanctions and falling oil prices have been taking their toll on the nation’s economy. As a result, bearish bets on Russian equities are growing.

The Russian ruble has tumbled 45% this year, including last week’s decline when Russia saw its worst day so far in its current financial crisis, which has so far lasted nine months. The MICEX currently has an average multiple of 5.1 this year, compared to the 10-year average of 8.2, reports Bloomberg.

The Russian Market Volatility Index hit a record high on Dec. 18. The Moscow Index has slipped nearly 4% year to day since Russia annexed Crimea in March and the West began instituting sanctions against Russia. According to CNBC, things could have been even worse for the index because if the ruble had not weakened along with oil prices.

The RTS Index is based on U.S. dollars rather than the ruble, and so far this year, it has declined more than 48%.

Why Apple is worse than Russia

MBMG Group managing partner Paul Gambles told CNBC this morning that he would rather invest in Russian equities than in Apple, a favorite stock on Wall Street. He said it’s all about valuations, as the MICEX Index looks cheap compared to Apple, according to Gambles.

“To me, at those sorts of prices, it’s starting to look like there’s a –speculative admittedly—high risk opportunity,” Gambles said. “There’s a play on Russia just because of the pricing.”

Last month, Bloomberg reported that an investor who owned all of Apple would be able to buy all of Russia’s stock market if they sold it and still have enough cash to purchase an iPhone 6 Plus for every Russian.

Gambles also said he doesn’t believe Russian stocks will remain at their current levels forever. He sees the possibility for “some sort of rebound.

“I’m not saying it’s a buy and hold,” he told CNBC. “But I think get in, try it.”

Legal & General Investment Management strategist Brian Coulton echoed Gambles’ view on Russia. He expects the nation’s economy to see more pain for now but believes next year could be better, as Western sanction expire.

Apple worth more than the MICEX

Apple’s market capitalization is at around $566.6 billion, compared to the MICEX’s market cap of around $350.4 billion. Shares of Apple have rallied this year, climbing 40% as the company releases new products like the Apple Watch.

Apple’s price to earnings ratio is 17.38, according data compiled by Reuters. That compares to the MICEX’s 5.97 price to earnings ratio. Many analysts see lower numbers as offering better investments.

Get our newsletter and our in-depth investor case studies all for free!

  • kumar

    lol why is this guy even on CNBC. he apparently doesnt understand risks. if russia doesnt leave ukraine or makes things worse more sanctions will hit russia. its even worse. unless he has a crystal ball lying around.

  • baligeko

    Fisherman can make good money with flounders, as they are are tasty fish.

  • baligeko

    Risk. Exactly.
    With Russia, you may be able to make large profits, but with an extremely high risk.
    With Apple, you can definitely make enormous profits, with an almost zero risk.
    I know which one the intelligent investors will choose.

  • DEVVVV

    there is a lot of investors that their main income is dividends provided by Apple.

  • DEVVVV

    as long as Apple is able to continue innovating the sky is the limit. Its innovation that drives a company. Just because a company has bottomed out (BlackBerry) it does not mean its uphill from their. Blackberry focusing on “what was”, rather than innovate “what will” will cause a total collapse and shares will drop to nothingness.

  • stockmusician

    Thanks. Flounder works too, but I meant “founder” in its other meaning – like the foundering of a sinking ship (or a sinking ruble).

  • mds

    LOL. If they were founding anything it might be good.
    But I believe you meant “FLOUNDERING” and you are on the money my friend.

  • stockmusician

    I think it’s ironic that the analyst named Gambles is suggesting people invest in a foundering economy rather than the largest, most profitable corporation on earth. That’s a gamble alright!

  • mds

    Russia is a joke. Their main product; Vodka; had been hammered by all the new brands.
    Stoli is yesterdays news. Oh yes……They have lots of oil; but they are too drunk to refine it.
    And they do have Caviar to enjoy with their Vodka; but that is hardly a money maker in our economy; let alone theirs. Save for the Russian Mob with all the USD$.
    LMAO!!!

  • mds

    Who is your expert Michelle? Putin!
    AAPL is worth more than the Russian Stock Market.
    Have you lost your mind by putting this out?
    I have come to expect better from you.