Fund Manager Bill Nygren of Oakmark Fund and Steve Wymer of Fidelity Investments believe that Apple Inc. (NASDAQ:AAPL) is still growing and has value despite the fact that its stock price declined by 20 percent year to date.
The stock price of Apple Inc. (NASDAQ:AAPL) is pressured as investors are concerned over the slowing growth of the company. Nygren and Wymer have different investment strategies but they have their own reasons to maintain their stockholdings in the iPhone and iPad maker, according to report from Justin Menza of CNBC.
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During the Morningstar Conference in Chicago, Nygren said “Given where the stock is priced … a lot can go wrong before the stock appears overvalued.
Wymer agreed to the opinion expressed by Nygren about Apple Inc. (NASDAQ:AAPL) during the conference. According to him, “the market is saying their position is going to decline rapidly.” He thinks that the market is worried that the iPhone and iPad maker might decline just like Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) and Motorola Mobility Holdings Inc (NYSE:MMI). Wymer emphasized that Apple’s competitors such as Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) and HTC Corp (TPE:2498) and other hardware makers using the Android operating system are “not better, but they are good enough.”
Apple Is The Largest Stockholding Of Fidelilty
Apple Inc. (NASDAQ:AAPL) is the largest stockholding of Fidelilty Growth Company Fund by the end of the first quarter of 2013. According to Wymer, it is critical for the tech giant to maintain a strong ecosystem. He emphasized that Apple does not only need a great hardware to support its software and apps, but is also needs to start delivering great services.
The tech giant recently revealed its new products including the new iOS 7, Mac OS X Mavericks, MacBook Air, Mac Pro, and the iTunes Radio. However, many analysts opined that Apple Inc. (NASDAQ:AAPL) news product offerings were unlikely to impress investors. In fact some of the analysts such as Peter Misek of Jefferies acknowledge that the tech giant did a great job with the iOS 7, but he pointed out that Apple needs to do more. According to him, the new products did not change the biggest dynamic that 70 percent of Apple’s profit comes from the iPhone, and the market is rapidly maturing. His simple advice for Apple is to find a new category to innovate.
Wymer also expressed that he was surprised on the rapid maturity of the smartphone business in developed countries. He cited that the other key for Apple Inc. (NASDAQ:AAPL) is to manage the slowdown of growth.
Wymer and Nygren believe that capital allocation is important for Apple Inc. (NASDAQ:AAPL).
Nygren said, “As companies get into a more mature phase, capital allocation becomes important.” He added that the company will be able to reduce risks by returning capital to shareholders through dividends and share buyback. It will also prevent the company from entering the phase of slow growth and chasing after growth by making bad investments of acquisitions.
On the other hand, Wymer said, “Those that throw money at a business to achieve growth rates that are no longer achievable can be a problem.”