Cramer On Why Apple Inc. (AAPL) Stock Is Still Too Low

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Cramer On Why Apple Inc. (AAPL) Stock Is Still Too Low
2014-06-06 11.20.35 by PapaAndDaddy on 2014-06-06 11:20:35

Apple Inc. (NASDAQ:AAPL) stock is too low, believes CNBC host Jim Cramer, who says the benefit of users switching from Samsung to Apple is not reflected in the stock price as yet.

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“I think the phone remains supply-constrained … and therefore the stock is too low,” the Mad Money host said.

Market rising on real strength

Cramer is convinced that the market has risen on real strength and not because investors are covering short positions. He arrived at this conclusion after he noticed a rare combination of events that took place in the stock market, and Apple Inc. (NASDAQ:AAPL) was the first sign of strength that he saw, reports CNBC.

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“When you can find companies that could be conceptually undervalued and their stocks run on that, even when they were already expensive on an earnings basis, then you have a powerful thrust that sends us higher even before anyone has time to ring the register,” the expert said.

Also Cramer said Thursday that if Salesforce called off the talks to acquire Twitter, it had nothing to do with Twitter itself. Instead, he believes it was related to LinkedIn.

Apple stock up after supplier reports strong numbers

Apple Inc. (NASDAQ:AAPL) stock gained yesterday after German supplier Dialog Semiconductor said its quarterly revenue was higher than expected. This news added to the recent enthusiasm about demand for the new iPhone. Dialog received about 80% of its revenue from Apple last year, making its financial numbers a potential indicator of iPhone sales, notes Reuters.

Dialog reported preliminary third quarter revenue above the mid-point of its outlook range by 13% and up by 5% on a YoY basis. It said that China’s National Day holiday brought forward orders for its mobile chips.

In a note to clients on Thursday, Credit Suisse analyst Kulbinder Garcha wrote, “We believe this is another confirming data point of stronger than expected iPhone demand, corroborating the U.S. carriers’ reports a few weeks ago.”

Global demand for smartphones is on a decline, and Apple Inc. (NASDAQ:AAPL) is relying fully on the iPhone 7 to help it gain some of Samsung’s market share. It also hopes that the new iPhone will help it limit an expected decline in annual revenue. According to market research firm IDC, due to slow replacement in the U.S., global smartphone shipments are expected to grow by less than 2% this year compared to 10% in 2015.

At 9:40 a.m. Eastern, Apple Inc. (NASDAQ:AAPL) shares were up 0.41% at $114.41. Year to date, the stock is up almost 7%, while in the last year, it is up more than 3%.

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Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com
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