Apple is among the financially stable companies that look like good values over the long haul, according to a CNN Money
Technology as a whole may not be dead but the trick for long-term success is finding companies that have weathered the downturn and are in position to benefit most from an upturn, the article notes. Wendell Perkins, manager of the JohnsonFamily Large Cap Value and JohnsonFamily Small Cap Value funds, told CNN Money that he only buys technology companies with little or no debt and a relatively large amount of cash. He says that survivors in the tech sector will be companies with strong enough balance sheets to enable continued spending on research and development. Among such companies are Microsoft and Apple.
“Microsoft, of course, has possibly the best balance sheet of any company in the world, with $38.7 billion in cash and no debt,” the article says. And although Apple has been struggling lately (it issued an earnings warning earlier this month), Perkins thinks that the stock is worth a look because it is the only innovative company in the personal computer sector. Apple spent about 7.5 percent of its revenue in the last quarter on research and development, a higher percentage than Dell, Gateway and Hewlett-Packard.
Based on estimates for the next fiscal year, CNN Money and First Call give Apple a long term, EPS growth rate of 10 percent. (Microsoft is given 15 percent.)