The Value Investor v.30 Apple’s huge moat

No american company is more known in Sweden and globally than Apple. It is in spite of its enormously well-known name of a company that often has been misunderstood by both analysts and the market as a whole. Ironic, one might think, when almost all can count up to Apple’s products and their business concept is not difficult to comprehend if one just avoids falling into the trap that Apple would be a techbolag in the crowd. If nothing else, then, should the fact that Apple is the world’s most valued company to give a clue that this is not the case.

Why will I land up in this company is köpvärt today? With a word – for they have a great moat. With a little more words to it has very loyal users, sustainably high margins, good EPS development, huge cash, is very innovative and despite this, with PE around 17 is attractively valued. Not least for the long-term, which I have been since 2011.

What separates Apple from almost all other konsumentelektronikbolag is without a doubt the ability to create products that almost without exception become iconic, changing the market (Mac, iPod, iPad, Apple Watch m.fl) or the entire world (the iPhone) and those who buy them are extremely loyal to the company when they eventually upgrade. Long has this condescending called kultbeteende of those who do not tilltalats of Apple’s products, but today well over half a billion users, which would be far more if not Apple’s prices would be so high, it is not possible to see the user base as a little cult anymore.

Because it isn’t common among its competitors that it has loyal users drug analysts in the past all over a comb, and stated that Apple, like all techbolag, would soon see their margins fall (has not happened), the new high-end option would soon take the market of iPhone (available even ten years after its launch, no signs of this) and launched a mythical theory that companies can only reach a certain size, which they called the ”law of high numbers” that would make it impossible to grow so much more. In fact, Apple has in the rule a small part of the market (for t.ex. smartphones around 15 %), but they always have the price and thus marginalmässigt most loosening the part, and strikes hardly any other roof than the simple fact that only a limited part of the world (yet) can buy their products.

As I indicated above, the distrust against Apple now fallen in line with that it has made the process short with many of their previous respected competitors (Motorola, Sony, Nokia, BlackBerry, HTC, LG m.fl) and the last big threat of the Samsung earn more on delivering chips etc to Apple than on their mobiles as well as Sony to sell camera models to Apple. After ten years, one can not credibly claim that any new mobile or plattdator is a new ”iPhone/iPad killer” or say that everything will soon run for Apple. The Iphone holds its own, although growth, of course, have subsided by the time and is between 200 and 250 million sold per year and, amazingly enough, over time growing margins.

The former rejected the checkout today over 150 billion despite huge buybacks and a good dividend, has also been a revaluation, which I think will continue. The market knows that Apple shareholder, thanks to the is absolutely guaranteed annual increasing dividend for a very long time. Most important, however, is that Apple does not at all pull down on the ceilings in the buy-back. With now 20 % of the shares cancelled since the start of 2013, and an annual rate of the young. The 5% closest to the guarantees that a growing earnings per share.

When you report the second quarter (the”fiscal third”) on Tuesday, so will, however, not only iPhone sales will be examined. You have a couple of years ago a new ”runner-up” among the segments- ”Services”, which in short is the result of everything that Apple customers buy their products. Warranties, software, ApplePay, Apple’s part of the very rapidly increasing revenue in the App Store, iTunes and much more. Simply the result of loyal and affluent customers who are willing to invest in their darlings.

Services has grown by 20-25 % per year in recent years and has a fantastic margin. Today 15 % of sales and, naturally, huge margins is Services now the market’s new darling and a worthy replacement for the iPad, which has slowly declined as users, albeit hugely loyal, no real competition is to take today, not long to upgrade their iPad very often.

Apple’s immediate future, say the next five years, will, no doubt, to a large extent, of course, be determined by whether it manages to continue to create köpvärda products. If the last 40 years are a guide, however, is the probability very great for this. In addition, you will probably a solid iPhone sales, continued growing Services segment and, huge reversals by the fund to shareholders to be the basis for a higher valuation of Apple’s profits. It is not long since this was at 12-13 times annual profit, and today I see no reason to believe that the appreciation will subside or go back.

Apple is of Warren Buffett/BRK’s biggest holding, for the simple reason that he looks, this is a huge loyal customer base that Apple’s large moat. It is not possible to create a new ”ecosystem” (hardware, software and services) in the way that Apple has done without having to spend a lot of time, huge investment, and sustainable-desirable goods and services. iOS, MacOS, and the products forming today an extremely attractive ecosystem that allows Apple to take badly paid for both goods and services. It has also been shown to be hugely sustainable, and just grown.

Apple is no short-term holdings – I don’t know how next week’s report will be but even if the course varies, so the long-term trend is very positive. As a little icing on the cake right now, so it seems to be clear that, judging by the rumors, for the tenth anniversary in the fall are releasing a very big update of the iPhone. Apple will probably be the world’s first ”trillion dollar company” (800 billion today) and, as I said in the Börspodden so I think the share is on the way to 200 dollars. With high probability, Apple has its best days ahead of him. For anyone who is willing to go across the Atlantic, Apple is a relatively safe bet.


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